What is the Bonchon franchisee's obligation regarding the System Brand Fund Contribution?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
the Sample By-Laws, Exhibit G to the Franchise Agreement.)
System Brand Fund
You must contribute to our system a weekly System Brand Fund Contribution of up to 4% of your previous week's Gross Revenues. The required amount may change during the term of the Franchise Agreement, but in no event will be more than 4.0% of Gross Revenues. (Franchise Agreement,
Section 10.01.) All of our franchisees are required to contribute at the same rate except as prohibited by applicable law. Bonchon Businesses which we or our affiliates have or may in the future establish and operate may (but are not required to) contribute to the Fund.
We will direct all advertising programs and control the creative concepts, materials and media used, media placement and allocation. We need not make expenditures for you which are equivalent or proportionate to your contributions. We need not ensure that any particular franchisee benefits directly or proportionately from Fund advertising. The Fund is not a trust and we are not a fiduciary.
The Fund may be used to meet all costs of administering, directing, preparing, placing and paying for national, regional or local advertising. This includes: production and media; television, radio, video, audio, cable, magazine, newspaper, written materials, graphics, electronic media, and worldwide web/internet advertising campaigns; other advertising, marketing and public relations and promotional materials; point-of-purchase materials; consumer research, menu and promotion analytics tracking; interviews and related activities; the creation, maintenance and periodic modification of the Bonchon website; reviewing any advertising material you propose to use (as provided below); search engine optimization;
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 45–60)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, franchisees must contribute to the System Brand Fund. This contribution is up to 4% of the previous week's Gross Revenues. While the required amount may change during the term of the Franchise Agreement, it will not exceed 4.0% of Gross Revenues. All Bonchon franchisees are required to contribute at the same rate, unless prohibited by law. Bonchon may also form a regional Advertising Cooperative for the franchisee's area, in which case Bonchon will notify the franchisee in writing of the starting date and amount of their advertising cooperative contributions. Contributions to this cooperative will be at least 1% but no more than 4% of Gross Revenues, unless the Cooperative changes the maximum contribution under its By-Laws.
The System Brand Fund is used for various advertising, marketing, and promotional activities to enhance and protect the Bonchon system. These activities include media production and placement, merchandising development, administrative and promotional expenses, brand development, and franchisee advertising support. For the fiscal year ending December 31, 2024, Fund income was spent in the following approximate amounts: 18.8% on media production; 35.8% on media placement; 2.2% on merchandising development; 14.8% on administrative expenses; 17.6% on promotional expenses; 0.8% on brand development; and 10% on other items (including, research and testing and franchisee advertising support).
Bonchon directs all advertising programs and controls the creative concepts, materials, media used, media placement, and allocation. Bonchon is not obligated to ensure that any particular franchisee benefits directly or proportionately from Fund advertising. The Fund is not a trust, and Bonchon is not a fiduciary. Bonchon may rebate all or a portion of the Fund contributions to franchisees on a proportionate basis if the total contributions are insufficient to sustain a meaningful regional or national advertising campaign. Franchisees must spend any rebate on the types of local advertising and media that Bonchon determines, according to a plan and budget Bonchon reviews and approves in advance. Franchisees must document all rebate advertising expenditures in a monthly rebate advertising expenditure report form.
Bonchon may provide merchandising materials identifying the System and to support national promotions, such as menu panels, point of purchase advertising materials, System memorabilia and other brand-relevant merchandise. Franchisees are required to pay the cost for these materials, including shipping and insurance. Bonchon may require franchisees to feature the availability of Bonchon franchises in their advertising materials, in a form, style, and placement designated by Bonchon. Franchisees must submit these materials to Bonchon for approval and potential filing with state regulatory authorities.