If a Bonchon franchisee fails to make required payments to a Regional Advertising Cooperative, what potential consequence may occur?

According to Bonchon's 2025 Franchise Disclosure Document, a franchisee's failure to make required payments to a Regional Advertising Cooperative constitutes a material breach of the Franchise Agreement. If the franchisee does not correct this failure as described in Section 17.03 of the agreement, Bonchon may terminate the Franchise Agreement.

Regional Advertising Cooperatives may be established by Bonchon for geographic areas encompassing three or more Bonchon businesses. Franchisees are required to contribute to these cooperatives, with contributions ranging from 1% to 4% of Gross Revenues, although this maximum can be changed by franchisee Cooperative members. These cooperatives use funds for various advertising and marketing activities, including developing advertising campaigns, conducting market research, and employing advertising agencies.

This means that consistent with standard franchise practices, Bonchon franchisees must maintain timely payments to advertising cooperatives. Failure to do so can lead to the termination of their franchise agreement, highlighting the importance of managing finances and adhering to the terms of the agreement.