What are the details of the 2025 Existing Franchisee Development Incentive Program for existing Area Developers under the Bonchon Franchise Agreement Rider?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
G-2, respectively.
To incentivize existing franchisees to open Restaurants in 2025, we currently offer a development incentive program. If you and we enter into a Franchise Agreement on or before December 31, 2025 under an existing Area Development Agreement (the "Existing ADA") that was previously executed and you open the Restaurant no later than the Scheduled Opening Date listed in the Area Development Agreement, then for that Restaurant we will reduce: (i) the Initial Franchise Fee to $20,000 and (ii) the weekly Continuing Royalty rate to 2.5% of your previous week's Gross Revenues for the first full 12 months of operations, after which the weekly Continuing Royalty rate will be 5.0% of your previous week's Gross Revenues. In order to receive the foregoing incentives, you will enter into a rider to the Franchise Agreement for each Restaurant that you commit to develop under the Existing ADA. Our form of rider is attached to this Disclosure Docu
Source: Item 22 — CONTRACTS (FDD pages 91–92)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, existing franchisees who are also Area Developers may be eligible for a development incentive program. To qualify, the franchisee and Bonchon must enter into a Franchise Agreement on or before December 31, 2025, under an existing Area Development Agreement (ADA). The restaurant must open no later than the Scheduled Opening Date listed in the Area Development Agreement. If these conditions are met, Bonchon will reduce the Initial Franchise Fee to $20,000 and the weekly Continuing Royalty rate to 2.5% of the previous week's Gross Revenues for the first full 12 months of operation. After this initial period, the weekly Continuing Royalty rate will increase to 5.0% of the previous week's Gross Revenues.
To participate in this incentive program, the franchisee must enter into a rider to the Franchise Agreement for each restaurant they commit to develop under the Existing ADA. This rider modifies specific sections of the franchise agreement to reflect the incentives offered under the 2025 Development Incentive Program. The franchisee must adhere to the Scheduled Opening Dates in Section 6.01 of the Area Development Agreement to remain eligible.
Several conditions must be satisfied for an Area Developer to receive the incentives. The restaurant must open to the public and commence regular operations by the Scheduled Opening Date in Section 6.01 of the Area Development Agreement. Additionally, the Area Developer and any approved franchisee affiliates must be in full compliance with the Area Development Agreement, their respective franchise agreements, and all other agreements with Bonchon and its affiliates. The incentives described in the rider are not transferable. If the franchisee transfers the Franchise Agreement, the incentives for the restaurant will immediately terminate.
This incentive is designed to encourage existing franchisees to expand their operations by opening additional Bonchon restaurants. By reducing the initial franchise fee and the royalty rate for the first year, Bonchon aims to lower the initial financial burden on franchisees, making it more attractive for them to develop new locations. However, franchisees should be aware of the conditions and ensure they meet all requirements to maintain eligibility for the incentives.