What costs does Bonchon capitalize as direct and incremental costs associated with the sale of franchises?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
The direct and incremental costs, principally consisting of commissions, are included in "Prepaid commissions" in the accompanying balance sheets. The direct and incremental costs expected to be recognized over the remaining term of the associated franchise agreements at December 31, 2024, are as follows:
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the direct and incremental costs associated with the sale of franchises that Bonchon capitalizes primarily consist of commissions. These costs are recorded as "Prepaid commissions" on Bonchon's balance sheets.
As of December 31, 2024, Bonchon expects to recognize these direct and incremental costs over the remaining term of the associated franchise agreements. This means that the costs are not fully expensed immediately but are instead spread out over the life of the franchise agreement.
For a prospective franchisee, this information is relevant for understanding Bonchon's accounting practices related to franchise sales. However, it does not directly impact the franchisee's own costs or financial obligations. Franchisees should focus on the fees and expenses outlined in other sections of the FDD to understand their own financial commitments.