How is the Area Development Fee for a Bonchon franchise calculated?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
eement will be for a period beginning on the date we sign this Agreement and extending until the earlier of the actual date the last Franchise Agreement is executed pursuant to this Agreement or the Due Date of Execution of Lease for the last restaurant to be developed pursuant to and specified in Section 6.01 of this Agreement, unless sooner terminated in accordance with the provisions of this Agreement.
4.02 Notice of Expiration
If applicable law requires us to give notice of expiration to you at a specified time before the expiration of the Term of this Agreement, and we have not done so, then the term of this Agreement will be extended on a month-to-month basis until we have given you the required notice of expiration and the required period before the expiration of the Agreement becomes effective has expired.
5. AREA DEVELOPMENT FEE
5.01 Area Development Fee
In consideration of our execution of this Agreement, you agree to pay us an area development fee equal to: (i) the Initial Franchise Fee for the first Bonchon Business that you will develop, plus (ii) a $10,000 deposit for each subsequent Bonchon Businesses (the "Area Development Deposit") which you are required to develop, own and operate pursuant to Section 6.01 of this Agreement (the "Area Development Fee").
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the Area Development Fee is the sum of two components. First, it includes the Initial Franchise Fee for the first Bonchon restaurant that the developer will open. Second, it adds a $10,000 deposit for each subsequent Bonchon restaurant that the developer is obligated to develop, own, and operate under the Area Development Agreement. This total fee is payable in full upon signing the Area Development Agreement and is considered fully earned by Bonchon upon payment.
Bonchon emphasizes that the Area Development Fee is non-refundable, in whole or in part, under any circumstances. This policy reflects Bonchon's view that it incurs administrative and other expenses related to the agreement and foregoes other development opportunities by granting territorial rights to the developer.
For a prospective Bonchon area developer, this means a significant upfront investment is required, and careful consideration should be given to the development schedule and obligations. Failure to meet the development schedule can result in termination of the Area Development Agreement and loss of the Area Development Fee for undeveloped restaurants, as well as the rights to develop those locations. The $10,000 deposit per restaurant is credited towards the Initial Franchise Fee for each location as it opens.