How does the Continuing Royalty fee for a Bonchon franchise in Item 6 relate to the definition of 'Gross Revenues' mentioned in the same item?
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 |
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the Continuing Royalty fee is directly related to the Gross Revenues of the franchised business. Item 6 specifies that the Continuing Royalty is a percentage of the franchisee's Gross Revenues.
Specifically, the Continuing Royalty is 5.0% of the previous week's Gross Revenues after the first twelve months of operation. This royalty is payable weekly on Tuesday of the following week. The FDD clarifies that "Gross Revenues" includes all revenues from the franchised Bonchon business. A full definition of Gross Revenues is found in Section 5.05 of the Franchise Agreement.
This means that the amount a Bonchon franchisee pays in Continuing Royalties is directly proportional to the total revenue generated by their restaurant. Higher revenues will result in higher royalty payments, and vice versa. It is important for prospective franchisees to understand what constitutes Gross Revenues, as this figure directly impacts their royalty obligations to Bonchon.