Is Bonchon obligated to ensure that advertising expenditures from the Bonchon System Brand Fund are equivalent or proportionate to each franchisee's contributions?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. We will direct all advertising programs, with sole control over the creative concepts, materials and media used in such programs, and the placement and allocation of Fund advertising. You acknowledge that the Fund is intended to further general public recognition and acceptance of the Proprietary Marks for the benefit of the Bonchon System. You further acknowledge that we and our designees undertake no obligation in administering the Fund to make expenditures for you which are equivalent or proportionate to your contributions, to ensure that any particular franchisee benefits directly or pro rata from the placement of advertising or to ensure that any advertising impacts or penetrates your Restaurant Location. The Fund is not a trust and we are not a fiduciary with respect to the Fund.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, Bonchon is not obligated to ensure that advertising expenditures from the System Brand Fund are equivalent or proportionate to each franchisee's contributions. Bonchon has sole control over the advertising programs, including the creative concepts, materials, media used, and the placement and allocation of advertising funds. The purpose of the fund is to further general public recognition and acceptance of the Bonchon system for the benefit of all franchisees.
Bonchon does not guarantee that any particular franchisee will directly or proportionally benefit from the placement of advertising or that advertising will specifically impact their restaurant location. The Franchise Disclosure Document states that the System Brand Fund is not a trust, and Bonchon is not a fiduciary with respect to the fund. This means Bonchon has considerable discretion in how the fund is used, provided it benefits the Bonchon system as a whole.
While franchisees contribute to the System Brand Fund, they do not have a direct say in how the funds are spent. Bonchon retains the right to allocate funds to different regions or localities as it deems appropriate. However, Bonchon may offer rebates to franchisees for local advertising expenditures if national or regional advertising programs are not effective in certain areas. These rebates must be spent on advertising types approved by Bonchon, and franchisees must provide documentation of these expenditures.