How will the purchase price for leasehold improvements, furniture, fixtures, supplies, equipment, and trade dress elements be determined if Bonchon exercises its option to purchase the Bonchon franchised business's assets?

According to Bonchon's 2025 Franchise Disclosure Document, if Bonchon exercises its option to purchase a franchised business's assets upon termination or expiration of the franchise agreement, the purchase price for leasehold improvements, furniture, fixtures, supplies, equipment, and trade dress elements will be equal to their depreciated book value. This valuation method provides a standardized approach to determine the price of these assets.

This means that the franchisee will receive compensation based on the remaining book value of these assets after accounting for depreciation. Depreciation is an accounting method of allocating the cost of an asset over its useful life, reflecting its wear and tear or obsolescence. The depreciated book value is the original cost of the asset less any accumulated depreciation.

For a prospective franchisee, this implies that the resale value of these assets back to Bonchon at the end of the franchise term will not be at their original purchase price but rather at their value after depreciation. Franchisees should maintain accurate records of asset costs and depreciation schedules to understand the potential value of these assets should Bonchon exercise its purchase option. This is a fairly standard practice in franchising, as it accounts for the use and wear of assets over the term of the franchise agreement.