What is the '2025 Incentive Program' referenced in the Bonchon Franchise Agreement Rider, and why are the Franchisor and Franchisee signing this Rider in relation to it?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
Simultaneously with signing this Rider, Franchisor and Franchisee are signing the Franchise Agreement, wherein Franchisee is granted the right and undertakes the obligation to operate a Bonchon Restaurant located at (the "Restaurant"). Franchisor and Franchisee are signing this Rider because, under an Area Development Agreement previously signed by Franchisor and Franchisee (or its approved affiliate) on (the "Area Development Agreement"), Franchisor committed (upon the satisfaction of certain conditions) to modify certain sections of each franchise agreement to be signed for certain Bonchon Restaurants to be developed under the Area Development Agreement where the Restaurant opens and commences operations in accordance with the terms of this Rider to reflect the incentives offered by Franchisor under a limited-time incentive program for new development (the "2025 Incentive Program"). As Franchisee is eligible to participate in Franchisor's 2025 Incentive Program, Franchise and Franchisee desire to modify certain sections of the Franchise Agreement to reflect the incentives offered under Franchisor's 2025 Incentive Program.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the '2025 Incentive Program' is a limited-time incentive program for new development. This program is offered to area developers who sign an area development agreement for a minimum of three Bonchon Restaurants on or before December 31, 2025. To qualify, the franchised restaurants must open no later than the Scheduled Opening Dates outlined in Section 6.01 of the Area Development Agreement.
Under the 2025 Development Incentive Program, qualified area developers will benefit from a reduced Initial Franchise Fee of $20,000. Additionally, they will pay a reduced weekly Continuing Royalty rate of 2.5% of the Developer's previous week's Gross Revenues for the first full 12 months of operations. After this initial period, the weekly Continuing Royalty rate will increase to 5.0% of the Area Developer's previous week's Gross Revenues.
The Franchisee and Bonchon are signing the Franchise Agreement Rider to reflect the incentives offered under the 2025 Incentive Program. This modification to the franchise agreement is made because the Franchisee is eligible to participate in the 2025 Incentive Program, and both parties want to ensure that the agreement reflects the terms of this incentive. The Rider supplements and amends the original Franchise Agreement, with the Rider's terms taking precedence in case of any conflict or ambiguity.