Is a Bonchon franchisee entitled to a credit against their minimum local advertising and promotion requirement for contributions made to an advertising cooperative?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
You will be entitled to a credit against your minimum local advertising and promotion requirement for contributions made to an advertising cooperative (as provided for in Section 10.04).
10.04 Advertising Cooperatives
We may, from time to time, establish, change, merge or dissolve regional advertising cooperatives for a geographic area which encompasses three or more Bonchon Businesses (each a "Regional Advertising Cooperative"). We will furnish to you written notice of the establishment of any Regional Advertising Cooperative for your geographic area. The notice will specify the date you are to begin contributions and the amount of the contributions. Contributions will be calculated as a percentage of Gross Revenues as defined in Section 5.05 above. Your contributions to a Regional Advertising Cooperative will not be less than 1% nor more than 4% of your Gross Revenues, unless the maximum contribution is changed by franchisee Cooperative members in accordance with the terms of the Bylaws of the Cooperative. You will be entitled to a credit against your minimum local
advertising and promotion requirement as set forth in Section 10.03 for contributions made to an advertising cooperative.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, a franchisee is entitled to a credit against their minimum local advertising and promotion requirement for contributions made to an advertising cooperative. Bonchon may establish regional advertising cooperatives encompassing three or more Bonchon businesses. Franchisees will receive written notice specifying the contribution start date and amount, calculated as a percentage of Gross Revenues, as defined in Section 5.05. Contributions will range from 1% to 4% of Gross Revenues, but this maximum can be changed by franchisee Cooperative members according to the Cooperative's Bylaws.
This means that if a Bonchon franchisee participates in a regional advertising cooperative, the money they contribute to that co-op can be used to offset the amount they are required to spend on local advertising. This provides flexibility in how advertising funds are allocated, potentially allowing franchisees to benefit from larger-scale, regional campaigns while still meeting their local advertising obligations.
It is important for prospective franchisees to understand the terms and conditions of the advertising cooperative, including the contribution amounts, how the funds are used, and the Bylaws governing the cooperative. Franchisees should also be aware that failure to make required payments to the Regional Advertising Cooperative constitutes a material breach of the Franchise Agreement, potentially leading to termination.