Kaufmann Gildin & Robbins LLP recently secured a significant victory for its client, Bonchon Franchise LLC, one of the nation’s leading Korean fried chicken franchise systems. On May 28, 2026, Judge Colleen McMahon of the United States District Court for the Southern District of New York granted Bonchon’s motion for a preliminary injunction — halting a former franchisee’s competing restaurant and ordering immediate compliance with post-term non-competition and confidentiality obligations. The ruling in Bonchon Franchise LLC v. Xiao Cheng Zhou et al., No. 26-cv-3973 (S.D.N.Y.), is a strong reminder that franchise covenants not to compete carry real teeth, and that franchisors who move decisively can obtain swift judicial relief.
Background: A Franchisee Who Didn’t Miss a Beat
Mr. Xiao Cheng Zhou operated a franchised Bonchon restaurant at 170 College Street in New Haven, Connecticut under a 2015 Franchise Agreement. The ten-year term expired on October 30, 2025. The Complaint alleged that Mr. Zhou closed the Bonchon location on October 29 — one day early — and promptly opened a new restaurant called “MAMA SHIM” at the exact same address. According to the Complaint, MAMA SHIM’s menu mirrored what Mr. Zhou had been serving as a Bonchon franchisee: Korean style fried chicken, complementary appetizers, side dishes, and beverages.
The Franchise Agreement’s post-term covenant prohibited Mr. Zhou, his spouse, and any entity he controlled from engaging in a Competitive Business — defined broadly as any business offering products or services authorized for sale under the Bonchon system — within ten miles of the former location for two years following expiration. Mr. Zhou had also signed a separate Confidentiality/Non-Competition Agreement reinforcing those obligations. Despite having received the moving papers and contacted Bonchon’s counsel, neither Mr. Zhou, his wife Eileen Zhou, nor their entity Stamford Brother, LLC appeared in court or opposed the motion.
How Kaufmann Gildin & Robbins Secured the Win
Our team filed suit on May 13, 2026 and moved for a preliminary injunction the same day. We successfully demonstrated each of the required elements: (1) a likelihood of success on the merits, based on the unambiguous covenant language and the undisputed fact that MAMA SHIM was operating in direct competition with Bonchon’s system; (2) irreparable harm, supported in part by the franchisee’s own contractual acknowledgment in Section 12.04 of the Franchise Agreement that violations of the non-compete would cause irreparable injury for which no adequate legal remedy exists; and (3) that the balance of hardships and the public interest favored relief. As a result, the Court issued a preliminary injunction enforcing the non-compete provisions of the Franchise Agreement.
The Court also extended the injunction to Mrs. Zhou and the corporate entity Stamford Brother, LLC — neither of whom signed the franchise agreements — by applying the well-established principle that non-signatories “closely related” to a dispute may be bound by forum selection clauses and the obligations those agreements impose. The ruling confirms that franchisors can and should draft their non-compete provisions to expressly cover spouses and affiliated entities, and that courts will enforce that language.
The injunction runs through October 30, 2027, or the final resolution of the litigation — whichever comes first — and prohibits defendants from operating MAMA SHIM or any competing restaurant within the ten-mile radius depicted in the map attached to the Court’s order. Defendants were also ordered to immediately return all of Bonchon’s confidential information, including the Operations Manual.
After being served with the Order of Preliminary Injunction, Defendants retained counsel and provided Bonchon with evidence that they sold the Restaurant and were not operating it in violation of the Order. Having received a sworn statement of compliance with the Order, Bonchon voluntarily dismissed the action, without prejudice.
Implications for Franchisors
This case highlights several practical lessons for franchisors considering or already dealing with post-term competition from former franchisees:
- Draft broadly and specifically. Define “Competitive Business” to capture any product or service authorized under your system, not just direct brand lookalikes. Cover the franchisee, their spouse, and any entity they control.
- Include a contractual irreparable harm acknowledgment. Provisions like Section 12.04 in the Bonchon agreement — where the franchisee acknowledges violations will cause irreparable injury and that no adequate legal remedy exists — are valuable tools when seeking emergency injunctive relief.
- Act quickly. From filing to hearing took just two weeks in this case. The faster a franchisor moves, the sooner the bleeding stops.
- Use a forum selection clause. Mr. Zhou had agreed to venue in the Southern District of New York, enabling Bonchon to litigate in a forum of its choosing even though the restaurant was in Connecticut.
A Note for Franchisees
This decision is equally instructive for franchisees. Post-term non-compete obligations are real, and courts take them seriously. Opening a competing restaurant at the same address, with the same menu, the day after a franchise expires is unlikely to be treated as a close call. Franchisees who are approaching the end of their term — or who are contemplating a business pivot — should seek legal counsel well in advance to understand what restrictions apply and for how long.
Contact Us
Kaufmann Gildin & Robbins LLP represents franchisors and other clients in transactional, compliance, and litigation matters. If you have questions about enforcing post-term covenants, protecting your franchise system, or any other franchise law issue, please contact us. Call Kevin M. Shelley at 212-755-3100 or [email protected]. Thank you!
*Attorney advertising. © 2026 KAUFMANN GILDIN & ROBBINS • ALL RIGHTS RESERVED. Disclaimer: The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.