If local law prohibits uncompensated placement of fountain dispensing equipment, what is Bonchon required to pay Pepsi-Cola?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
Upon execution of this Agreement or at such time as the useful life of Participating Franchisee's existing fountain beverage dispensing equipment in each Outlet expires, as determined by Pepsi-Cola in its sole discretion, or in the event of early replacement as described below, Pepsi-Cola will provide to and install in each Outlet with and with mutually agreeable fountain dispensing equipment free of cost and expense to be used exclusively for dispensing the Fountain Products (where permitted by applicable local law) ("Equipment"), provided, however, that where local law, rule or regulation prohibits uncompensated placement of fountain dispensing equipment by soft drink vendors, Pepsi-Cola will charge the minimum legal rental fee. At all times, legal title to the Equipment will belong to Pepsi-Cola. Pepsi-Cola shall provide such Equipment in like-new condition as determined solely by Pepsi-Cola. Participating Franchisee will cooperate with Pepsi-Cola in maintaining the Equipment in good working order throughout the Term, and Pepsi-Cola will provide maintenance in accordance with the Service Program set forth herein. For purposes of this Agreement, the term "Equipment" shall include any fountain dispensing equipment provided by Pepsi-Cola under the parties' prior agreement relating to Pepsi-Cola's beverages, if any.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, Pepsi-Cola will provide and install fountain dispensing equipment in each Bonchon outlet at no cost, to be used exclusively for dispensing fountain products, where permitted by local law. However, if local law prohibits uncompensated placement of fountain dispensing equipment by soft drink vendors, Bonchon will be charged the minimum legal rental fee by Pepsi-Cola. This ensures compliance with local regulations while still allowing Bonchon franchisees to offer Pepsi-Cola products.
This arrangement means that Bonchon franchisees may incur a rental fee for the fountain dispensing equipment if local laws prevent Pepsi-Cola from providing the equipment without charge. The fee is specified as the "minimum legal rental fee," suggesting it is the lowest amount permissible under the applicable regulations. This cost should be factored into the franchisee's financial projections, as it will affect the overall operating expenses of the Bonchon franchise.
Bonchon franchisees should investigate local laws regarding uncompensated placement of equipment to determine if this rental fee will apply to their specific location. Understanding these local regulations is crucial for accurate financial planning and budgeting. Franchisees should also confirm with Pepsi-Cola the exact amount of the minimum legal rental fee in their area to avoid any unexpected costs.