Is a Bonchon franchisee required to submit financial and non-financial reports to Bonchon?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
lect to terminate this Agreement upon giving you notice and an opportunity to cure your default.
- G. You authorize us to incorporate in our franchise disclosure document and/or promotional literature information derived from the above financial statements, so long as you or your Bonchon Business are not individually identified.
11.02 Financial Records and Audit
- A. You agree to record all Gross Revenues received by and all expenditures made by you or your franchised Business. You further agree to keep and maintain adequate records of all such Gross Revenues and expenditures and to maintain accurate books, records and tax returns, including related supporting material (such as cash receipts, and credit and charge records) for your franchised Business. We may specify, in our Manuals or otherwise, the forms and media that you will be required to use in recording your franchised Business' Gross Revenues and expenditures. You agree to keep and preserve for seven years (or such longer period as may be required by any law, rule or regulation) the types and classes of electronic and/or other books, records and tax returns that we specify in our Manuals or otherwise, along with all business, personnel, financial and operating records, in any media, relating to your franchised Bonchon Business. If you do not maintain the required records, this will be a material and incurable breach of this Agreement which, unless we waive the breach, will entitle us to terminate this Agreement immediately upon notice to you, with no opportunity to cure.
- B. We and/or our agents (who may be outside accountants and auditors), designees and/or employees will have the right, at any time, with or without written notice, during normal business hours, to enter your Bonchon Restaurant and any other premises from which the Business is conducted, in a fashion calculated not to disrupt your Restaurant's and Business's operations, to inspect, audit and make copies of all records including, but not limited to, the following: books of accounts; bank statements; cash or other receipts; checkbooks; documents; records; sales and income tax returns (federal, state, foreign and, if applicable, city); and, your files relating to programs, services and products sold, business transacted and expenditures relating to the Business. These files must include (without limitation) your operating records; bookkeeping and accounting records; customer lists; customer job orders; operating records; operating reports; correspondence; general
business records; your copy of the Manuals (as amended); invoices; payroll records; journals; ledgers; files; memoranda and other correspondence; contracts; and, all sources and supporting records used to prepare the reports and forms which you are required to submit to us under this Agreement, including the books or records of any business entity which owns the franchised Business. You agree to make any of these materials available for examination at your premises. Alternatively, we may determine to conduct any such audit either at our offices or at the office of a designee of ours and, if we do, you will be required to transmit some or all of the foregoing books and records to us or our designee. In addition to the foregoing, we may require you to scan and electronically transmit to us such volume of the above-referenced records, files and documents as will not unreasonably burden the licensed business.
C. If an audit reveals that you understated the Gross Revenues on your weekly reports to us by any amount for any week within the period of examination, or for the entire period of examination, when compared to your actual Gross Revenues, then you agree to immediately pay us the additional amount payable as shown by the audit, plus interest calculated as provided in subsection 5.06 (D). If an audit reveals that you understated the Gross Revenues on your weekly reports to us by more than 2% but less than 5% for any week within the period of examination, or for the entire period of examination, then in addition to paying the additional amounts due and interest calculated as provided in subsection 5.06 (D), you agree to immediately pay us the full cost of the audit for the entire period of examination.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, franchisees are required to submit both financial and non-financial reports. Bonchon requires franchisees to record all gross revenues and expenditures, maintain adequate records, and keep accurate books, records, and tax returns. These records must be preserved for seven years, or longer if required by law. Failure to maintain these records constitutes a material breach of the Franchise Agreement, potentially leading to termination if not waived by Bonchon.
Bonchon has the right to inspect and audit a franchisee's Bonchon Restaurant and any other premises where the business is conducted. This includes the right to inspect, audit, and copy all records, such as books of accounts, bank statements, tax returns, and customer lists. These inspections can occur at any time during normal business hours, with or without written notice, in a manner that does not disrupt the Restaurant's operations.
Furthermore, franchisees must submit weekly reports or statements to Bonchon. Understating gross revenues by 5% or more in any weekly report, or submitting three or more weekly reports that understate gross revenues by 2% to 5% within a 36-week period, can result in penalties. Knowingly concealing revenues, maintaining false books, falsifying information, or submitting any false report to Bonchon are also grounds for penalties and potential termination of the agreement.
In addition to financial records, Bonchon requires franchisees to comply with all provisions of the Franchise Agreement, the Bonchon System, and the Manuals. Strict compliance is essential, and failure to adhere to these standards may damage the reputation and goodwill of the Bonchon network. Franchisees must also undertake measures to prevent fraudulent credit or debit transactions and comply with security protocols to protect financial information.