When are Continuing Royalty and System Brand Fund Contribution payments due to Bonchon?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
e deemed fully earned when paid solely in consideration of our execution of this Agreement and not in exchange for any particular products, services or assistance.
5.02 Continuing Royalty
From the opening date of your Bonchon Business and continuing through the end of the Initial Term of the Franchise Agreement, you agree to pay us a weekly Continuing Royalty equal to 5.0% of your previous week's Gross Revenues, as defined in Section 5.05.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, franchisees must pay a Continuing Royalty and System Brand Fund Contribution on a weekly basis. The Continuing Royalty is 5.0% of the previous week's Gross Revenues. The System Brand Fund Contribution is up to 4.0% of the prior week's Gross Revenues; currently, it is set at 1.5%.
These payments are ongoing obligations for the duration of the franchise agreement. Failure to make these payments can result in penalties, such as an increase in the Continuing Royalty rate to 15.0% if the franchisee is in material default of the agreement.
It is important for prospective franchisees to understand these ongoing costs and factor them into their financial projections. The weekly payment schedule means that franchisees must maintain consistent cash flow to meet these obligations. Additionally, the potential for the System Brand Fund Contribution to increase up to 4.0% should be considered in long-term financial planning.
Franchisees should also be aware of the conditions under which these payments may be affected by state or local laws regarding alcohol sales. If such laws restrict the ability to collect these fees from alcohol sales, Bonchon requires increased percentages from non-alcohol sales to compensate.