Under what conditions can Bonchon terminate the franchise agreement if a franchisee violates the restriction on mortgages, liens, pledges, or other security interests in their business entity's shares, equity interests, or other ownership interests?

According to Bonchon's 2025 Franchise Disclosure Document, Bonchon can terminate the franchise agreement immediately if a franchisee violates the restrictions on mortgages, liens, pledges, or other security interests related to the franchisee's business entity. This applies to shares, equity interests, or other ownership interests.

Specifically, Bonchon requires franchisees to obtain prior written consent before permitting any mortgage, lien, pledge, or other security interest on their business entity's shares, equity interests, or other ownership interests. This consent will not be unreasonably withheld, delayed, or conditioned. However, failure to obtain this consent and any violation of this restriction gives Bonchon the right to terminate the Franchise Agreement immediately upon providing notice to the franchisee.

This provision is designed to protect Bonchon's interests by ensuring that the franchisee's business remains financially stable and free from undue encumbrances that could jeopardize its operations or the Bonchon brand. It is a fairly standard clause in franchise agreements, as franchisors want to maintain control over the financial health and ownership structure of their franchisees' businesses.