For Bonchon, where are the 'due to BH' expenses included in the financial statements?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
December 26, 2018, the Licensor assigned all rights, title and interest in the trademark to the Ultimate Parent and the Company entered into a new license agreement with the Ultimate Parent under the same terms.
Related-party revenues
The Company receives franchisee advertising fees from locations owned and operated by the Parent and entities related through common ownership of the Parent. For the years ended December 31, 2024, 2023 and 2022, summary of franchisee advertising fees earned from these related parties are as follows:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Bonchon U.S.A., Inc. | $ 51,666 | $ 61,341 | $ 50,268 |
| Bonchon Allston LLC | 36,231 | 45,850 | 37,218 |
| 267W LLC | 8,504 | - | - |
| Total | $ 96,401 | $ 107,191 | $ 87,486 |
As of Dece
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the expenses due to Bonchon Holdings LLC (BH) are included within "Selling, general and administrative expenses" in the company's financial statements. These expenses stem from a management service agreement where Bonchon reimburses BH for actual costs incurred, plus a 5% markup, for management and administrative support services.
For the years ending December 31, 2024, 2023, and 2022, the management fees charged to Bonchon under this agreement totaled $7,204,607, $7,198,746, and $5,746,720, respectively. The balances due to BH at the end of 2024 and 2023 were $186,196 and $242,943, respectively.
This related-party transaction is important for prospective franchisees to understand because it represents a significant expense for Bonchon. Franchisees should be aware that a portion of their franchise fees and royalties contributes to covering these management and administrative costs. Understanding the nature and magnitude of these related-party transactions can provide a clearer picture of Bonchon's financial health and expense structure.