How does the Area Development Deposit for a Bonchon franchise relate to the Initial Franchise Fee for each franchised business operated under the Area Development Agreement?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
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Notes
- [1] If you sign an Area Development Agreement with us, then you will pay an Area Development Fee to us in full when you sign the Area Development Agreement. The Area Development Fee is equal to (i) the Initial Franchisee Fee for the first Bonchon Business that you will develop and (ii) a Deposit Fee of $10,000 for each subsequent Bonchon Business you wish to develop, and therefore varies depending on the number of Bonchon Businesses you agree to open within your Development Territory (as defined in the Area Development Agreement). The Area Development Fee is fully earned when paid and it is not refundable under any circumstances. The low end of the Area Development Fee is for the development of 2 Bonchon Businesses and the high end is for the development of 10 Bonchon Businesses (but this is not a maximum).
- [2] The estimate of professional fees in this chart is in addition to the professional fees that we estimate you will pay in connection with developing each Restaurant.
- [3] For each franchised Bonchon Business you will operate under the Area Development Agreement, you must make the additional initial investment described in the applicable Item 7 table above. The Area Development Deposit you pay for a Bonchon Business will be applied as a credit against the Initial Franchise Fee at the time the Franchise Agreement for that particular Business is signed.
Source: Item 7 — ESTIMATED INITIAL INVESTMENT YOUR ESTIMATED INITIAL INVESTMENT\ (FDD pages 24–37)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, if you sign an Area Development Agreement (ADA), you'll pay an Area Development Fee. This fee covers the Initial Franchise Fee for your first Bonchon restaurant, plus a $10,000 deposit for each additional Bonchon restaurant you plan to develop. The total Area Development Fee will vary based on how many restaurants you commit to opening within your designated Development Territory.
For each Bonchon restaurant you operate under the ADA, the Area Development Deposit you paid will be credited towards the Initial Franchise Fee when you sign the individual Franchise Agreement for that specific restaurant. This means that the $10,000 deposit you made for each restaurant beyond the first is essentially an advance payment towards the franchise fee for those locations.
The Initial Franchise Fee itself varies depending on the number of restaurants in your development schedule. For the first five restaurants, the fee is $35,000. For restaurants six through ten, it decreases to $30,000, and for the eleventh restaurant and beyond, it further decreases to $25,000. Therefore, the Area Development Deposit contributes to the overall Initial Franchise Fee due for each location, with the remaining balance of the Initial Franchise Fee being due at the time of signing the Franchise Agreement for each specific Bonchon restaurant.