Under what conditions is the Bonchon license agreement automatically renewable for additional terms?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
221, $746,312 and $681,340 for the years ended December 31, 2024, 2023 and 2022, respectively.
NOTE 5. COMMITMENTS AND CONTINGENCIES
Operating leases
The Company had an operating lease for an office space in New York City that expired on May 31, 2023 and was not renewed. Total operating lease expense for the years ended December 31, 2023 and 2022, amounted to $99,552 and $238,926, respectively.
Supplemental cash flow information related to leases was as follows:
| 2024 | 2023 | |
|---|---|---|
| Cash paid for amounts included in | ||
| measuring operating lease | ||
| liabilities: | ||
| Operating cash flows from | ||
| operating leases | $ - | $ 112,460 |
| Variable lease payments | $ - | $ 2,408 |
| Weighted-average lease term and |
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the license agreement between the company and Jin Duk Seo for the use of the registered name "Bonchon" is automatically renewable. The original agreement, established on December 19, 2011, was for a 20-year non-exclusive license.
This license agreement automatically renews for additional consecutive terms of 20 years after the initial term. The only condition that would prevent this automatic renewal is if both parties mutually agree otherwise. This agreement gave Bonchon the right to sell and operate Bonchon franchises in the United States, as well as the right to collect franchise fees, royalties, and other fees from franchisees. Bonchon paid the Licensor an initial license fee of $10 as defined in the license agreement.
It's important to note that on December 26, 2018, the Licensor assigned all rights, title, and interest in the trademark to the Ultimate Parent, and Bonchon entered into a new license agreement with the Ultimate Parent under the same terms. This means the automatic renewal clause now applies with the Ultimate Parent as the licensor.