How does Bonchon account for advertising fund fees when they exceed related advertising fund expenses in a reporting period?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
onchon System Brand Fund. Our right to expend monies from the System Advertising Fund to reimburse us for such activities is exclusive of any advertising agency fees which the Fund must expend to secure the services of an advertising agency or to have print, broadcast or internet advertising placed by an agency.
- E. Within 60 days following the close of our fiscal year, we will prepare (but not audit) a statement detailing Bonchon System Brand Fund income and expenses for the fiscal year just ended, a copy of which statement will be sent to you upon request.
- F. We expect to expend most contributions to the Fund for advertising during the fiscal year when the contributions are made. If not all advertising funds are spent in the fiscal year in which they accrue, we will use the remaining amount in the future for the benefit of the franchisees and the System. If franchisees request, we will provide them with an annual accounting of how advertising funds are spent, as stated in paragraph "E" immediately above.
- G. We reserve the right to use any media, create any programs and allocate brand funds to any regions or localities in any manner we consider appropriate in our business judgment. The allocation may include rebates to individual franchisees of some or all of their System Brand Fund contributions for local advertising expenditures if, in our judgment, our national or regional advertising program or campaign cannot effectively advertise or promote in certain regions or communities. If we determine that the total Bonchon System Brand Fund Contributions collected from all Bonchon franchisees is insufficient to sustain a meaningful regional or national advertising campaign, we may rebate all or a portion of the Fund contributions to franchisees on a pro rata basis. Franchisees must expend any rebate on the types of local advertising and media that we determine.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, if the advertising funds collected from franchisees are not fully spent during the fiscal year in which they were contributed, Bonchon will retain the remaining amount and use it in the future for the benefit of franchisees and the Bonchon system.
Bonchon provides an annual statement detailing the Bonchon System Brand Fund's income and expenses within 60 days following the close of its fiscal year. Franchisees can request a copy of this statement to understand how the advertising funds are being managed and spent.
Bonchon also retains the right to allocate brand funds to any regions or localities and use any media or create any programs as it deems appropriate. This includes the possibility of rebating some or all of a franchisee's System Brand Fund contributions for local advertising expenditures if Bonchon's national or regional advertising program is not effective in certain areas. Franchisees must expend any rebate on the types of local advertising and media that Bonchon determines and must document these expenditures in a monthly report.