When is the Continuing Royalty fee due for a Bonchon franchise?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
| (1) Type of Fee | (2) Amount | (3) Due Date | (4) Remarks |
|---|---|---|---|
| Continuing Royalty | 5.0% of previous week's Gross Revenues after first twelve months of operations and continuing throughout | Payable weekly on Tuesday of the next week | "Gross Revenues" includes all revenues from the franchised Business. Fully defined in Franchise Agreement, Section 5.05. See Note 1 |
All Continuing Royalty and System Brand Fund Contribution payments to us under the Franchise Agreement must be made by electronic funds transfer or other similar technology we designate that is designed to accomplish the same purpose. You must pay all costs of electronic funds transfer or other similar technology we designate.
From the opening date of your Bonchon Business and Restaurant and continuing through the end of the Initial Term of the Franchise Agreement, the weekly Continuing Royalty will equal 5.0% of your previous week's Gross Revenues.
If you are operating your Bonchon Business while you are in default of any provision of the Franchise Agreement other than those defaults listed in Sections 17.01 or 17.02, the weekly Continuing Royalty rates above will be tripled (and will therefore be 15.0%) for each and every one of your operating Bonchon Businesses and Restaurants during a period beginning on the date you receive from us a written notice of default and ending on the date the default is fully cured.
Franchisees who open Restaurants that qualify for our current development incentive program may benefit from certain incentives (see Item 5), one of which is that if you and we enter into an Area Development Agreement for three or more Restaurants on or before December 31, 2025 and you open an ADA Restaurant no later than the Scheduled Opening Date in the Area Development Agreement (, then for that ADA Restaurant we will reduce the Continuing Royalty rate to 2.5% for the first 12 months of operations, after which the Continuing Royalty rate will be 5.0%.
Source: Item 6 — OTHER FEES (FDD pages 13–24)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the Continuing Royalty fee is payable weekly. Specifically, it is due on Tuesday of the next week, calculated from the previous week's Gross Revenues. The standard Continuing Royalty is 5.0% of the previous week's Gross Revenues after the first twelve months of operation. Gross Revenues include all revenues from the franchised Bonchon business, as defined in Section 5.05 of the Franchise Agreement.
Bonchon requires that all Continuing Royalty payments be made via electronic funds transfer or similar technology that they designate. The franchisee is responsible for covering all costs associated with these electronic transfers or designated technologies.
It's important to note that the Continuing Royalty rate can significantly increase under certain circumstances. If a Bonchon franchisee is in default of any provision of the Franchise Agreement (excluding defaults listed in Sections 17.01 or 17.02), the weekly Continuing Royalty rate will be tripled to 15.0%. This higher rate applies to each operating Bonchon business during the period starting from the date the franchisee receives written notice of default from Bonchon and ending when the default is fully resolved. However, franchisees who qualify for Bonchon's development incentive program may benefit from a reduced Continuing Royalty rate of 2.5% for the first 12 months of operations for ADA Restaurants if they meet specific criteria, after which it returns to 5.0%.