Under the Bonchon franchise agreement, what constitutes a 'default' due to cross-default provisions?

According to Bonchon's 2025 Franchise Disclosure Document, a 'cross-default' provision means that if a franchisee (or any of its affiliates) defaults or breaches any agreement with Bonchon (or its affiliates), it will be considered a default under the franchise agreement. Similarly, any default or breach of the franchise agreement by the franchisee (or its affiliates) will be considered a default or breach under any other agreements between Bonchon (or its affiliates) and the franchisee (or its affiliates).

This cross-default provision has significant implications for Bonchon franchisees. If a franchisee has multiple agreements with Bonchon, such as multiple franchise agreements or a lease agreement, a default in one agreement can trigger a default in all other agreements. This could lead to the termination of all agreements, even if the franchisee is otherwise in good standing under those other agreements.

Furthermore, if the default under any other agreement would have allowed Bonchon to terminate the franchise agreement had the default occurred under the franchise agreement itself, then Bonchon has the right to terminate all other agreements between them and the franchisee. This provision gives Bonchon a broad right to terminate agreements based on defaults in related agreements, increasing the risk for franchisees. Franchisees should carefully review all agreements with Bonchon and ensure compliance to avoid triggering cross-default provisions.