Is Bonchon obligated to ensure that any particular franchisee benefits directly or pro rata from the placement of advertising from the Bonchon System Brand Fund?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
Fund**
We or our designee will administer the Bonchon System Brand Fund as follows:
- A. As provided in Section 5.03, you agree to pay us a Bonchon System Brand Fund Contribution which, combined with the contributions made by all other Bonchon franchisees, will constitute the Bonchon System Brand Fund (or the "Fund").
- 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.
- C. The Fund may be used to meet any and all costs of administering, directing, preparing, placing and paying for national, regional or local advertising, including (without limitation): production and media; television, radio, cable, video, audio, 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; advertising at sports events; sports team sponsorships;
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 any particular franchisee benefits directly or on a pro rata basis from the placement of advertising. Bonchon has sole control over the advertising programs, including the creative concepts, materials, and media used. The advertising fund is intended to further general public recognition and acceptance of the Bonchon system for the benefit of the entire Bonchon system.
Bonchon does not guarantee that advertising expenditures will be equivalent or proportionate to a franchisee's contributions, nor that advertising will specifically impact or penetrate a franchisee's restaurant location. The Franchise Disclosure Document states that the fund is not a trust, and Bonchon is not a fiduciary with respect to the fund.
However, Bonchon may allocate rebates to individual franchisees for local advertising expenditures if national or regional advertising programs cannot effectively advertise or promote in certain regions or communities. If the total contributions collected from all Bonchon franchisees are insufficient to sustain a meaningful regional or national advertising campaign, Bonchon may rebate all or a portion of the fund contributions to franchisees on a pro rata basis. Franchisees must expend any rebate on the types of local advertising and media that Bonchon determines and must document all rebate advertising expenditures in a monthly report.