How are advertising fund fees collected from Bonchon franchisees?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree to pay us a weekly System Brand Fund Contribution equal to up to 4.0% of your prior week's Gross Revenues (as defined in Section 5.05). Currently, your System Brand Fund Contribution is 1.5% of your prior week's Gross Revenues. These System Brand Fund Contributions will be expended as provided for in Section 10.01 below. We may, in our business judgment, change the required System Brand Fund Contribution during the term of this Agreement upon notice to you, but in no event shall it be more than 4.0% of Gross Revenues.
If a state or local law in which your Bonchon Business is located prohibits or restricts in any way your ability to pay and our ability to collect the System Brand Fund Contribution derived from the sale of alcoholic beverages at your Restaurant (an "Alcohol Restriction Law"), you will be required to pay whatever increased percentages of all Gross Revenues not deriving from the sale of alcohol are necessary so that the System Brand Fund Contribution you pay equals the System Brand Fund Contribution you would make if you were not subject to an Alcohol Restriction Law.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, franchisees are required to pay a weekly System Brand Fund Contribution. This contribution can be up to 4.0% of the prior week's Gross Revenues, but is currently set at 1.5%. These contributions from all franchisees form the Bonchon System Brand Fund, which is used for advertising and promotional activities. Bonchon retains the right to adjust the required System Brand Fund Contribution during the term of the Franchise Agreement, but it will not exceed 4.0% of Gross Revenues.
If a franchisee's Bonchon business is located in a state or locality with an Alcohol Restriction Law that limits the ability to collect advertising fees on alcohol sales, the franchisee will be required to pay a higher percentage of Gross Revenues not derived from alcohol sales. This ensures that the System Brand Fund Contribution equals what it would have been without the Alcohol Restriction Law. This adjustment ensures that all franchisees contribute their fair share to the advertising fund, regardless of local regulations on alcohol sales.
Franchisees are also subject to the requirements of Regional Advertising Cooperatives. Failure to make required payments to any Regional Advertising Cooperative constitutes a material breach of the Franchise Agreement, potentially leading to termination if not cured. This highlights the importance of adhering to all financial obligations related to advertising, both at the system-wide and regional levels, to maintain compliance with the franchise agreement.