Under the Bonchon franchise agreement, what constitutes a default if the franchisee or their affiliates breach any other agreement with Bonchon or its affiliates?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
Any default or breach by Licensee (or any of its affiliates) of any other agreement between Licensor, or its parent or the subsidiary, affiliate or designee of either entity (collectively, Licensor's "Affiliates") and Licensee (or any of its affiliates) will be deemed a default under this Agreement, and any default or breach of this Agreement by Licensee (or any of its affiliates) will be deemed a default or breach under any and all other agreements between Licensor (or any of its Affiliates) and Licensee (or any of its affiliates). If the nature of such default under any other agreement would have permitted Licensor to terminate this Agreement if default had occurred under this Agreement, then Licensor (or its Affiliates) will have the right to terminate all the other agreements between Licensor (or its Affiliates) and Licensee (or any of its affiliates) in the same manner provided for in this Agreement for termination of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, a franchisee can be considered in default if they (or any of their affiliates) breach any other agreement with Bonchon or its affiliates. This is known as a cross-default provision. This means that if a franchisee has multiple agreements with Bonchon, such as a franchise agreement, a development agreement, or a loan agreement, a breach of any one of those agreements can trigger a default under all of them.
This cross-default clause in the Bonchon franchise agreement has significant implications for franchisees. It creates a situation where a relatively minor breach of one agreement could lead to the termination of all agreements, including the franchise agreement itself. For example, a late payment on a loan could potentially trigger a default and termination of the franchise.
Bonchon (or its Affiliates) has the right to terminate all agreements between them and the franchisee (or its affiliates) if the nature of the default under any other agreement would have permitted Bonchon to terminate the specific agreement had the default occurred under that agreement. This provision gives Bonchon a broad right to terminate agreements based on defaults in other related agreements.
Prospective Bonchon franchisees should carefully review all agreements they enter into with Bonchon and its affiliates, understanding that a default in one agreement can have repercussions across all agreements. Franchisees should also ensure they have the financial resources and management capabilities to comply with all of their obligations under each agreement to avoid triggering a cross-default.