What are the potential sources of competition for a Bonchon franchisee as described in Item 12, and how might this competition affect their Gross Revenues, which are used to calculate the Continuing Royalty fee in Item 6?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
Gross Revenues were calculated in the same manner that you would calculate Gross Revenues for purposes of determining your Royalty. For the avoidance of doubt, "Gross Revenues" means all revenues and income from any source that was derived or received from, through, by or on account of the operation of the Restaurant business, whether received in cash, in services, in kind, from barter and/or exchange (valued at the full retail value of the goods or services received), on credit (whether or not ultimately payment on credit transactions is ultimately received), or otherwise. The following costs have been deducted from Gross Revenues: documented refunds, chargebacks, credits and allowances that given in good faith to customers; and, all sales taxes or similar taxes which legally charged to customers (if such taxes were added the taxes charged to the customers). This figure does not reflect either gross or net profit.
What This Means (2025 FDD)
I am unable to provide information on potential sources of competition for a Bonchon franchisee or how competition might affect their Gross Revenues, as Item 12 is not present in the provided excerpts. I can, however, discuss how Bonchon calculates gross revenues and continuing royalty fees, which are related to the question.
According to Bonchon's 2025 Franchise Disclosure Document, Gross Revenues are used to calculate the Continuing Royalty fee. Gross Revenues include all income from the Restaurant business, whether received in cash, services, or credit. The only deductions are documented refunds, chargebacks, and sales taxes charged to customers.
The weekly Continuing Royalty is 5.0% of the previous week's Gross Revenues. This royalty is paid throughout the Initial Term of the Franchise Agreement. However, franchisees who qualify for the development incentive program may have a reduced Continuing Royalty rate of 2.5% for the first 12 months of operations. If a franchisee is in default of the Franchise Agreement, the weekly Continuing Royalty rates will be tripled to 15.0% during the period of default.
Since competition is not discussed in the provided excerpts, a prospective Bonchon franchisee should ask the franchisor about potential competitors in their target market and how Bonchon differentiates itself from these competitors. Understanding the competitive landscape is crucial for projecting Gross Revenues and, consequently, the Continuing Royalty fees.