For a Bonchon Regional Advertising Cooperative, is it required that expenditures made by the Cooperative be proportionate to any franchisee's contributions?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
It will not be a requirement that expenditures made by a Regional Advertising Cooperative be proportionate to your contributions or those of any other franchisee. The Regional Advertising Cooperative funds will also cover all costs of administering, directing, preparing, placing and paying for advertising specific to the region. This includes: production and media; television, radio, video, audio, cable, 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; advertising at sports events; sports team sponsorships, mailers, door hangers, freestanding inserts/coupons, brochures and sponsorships; celebrity endorsements; influencer marketing; social media programs on the internet; other activities that we believe in our sole judgment are appropriate to enhance, promote and/or protect the Bonchon Regional Advertising Cooperative area; and, engaging advertising agencies to assist in any or all of the above activities, including fees to have print, broadcast and/or internet advertising placed by an agency, and all other public relations and advertising agency fees.
Your failure to make any required payments to any Regional Advertising Cooperative will be a material breach of this Agreement which, unless cured as provided in Section 17.03, may result in this Agreement being terminated.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, expenditures made by a Regional Advertising Cooperative are not required to be proportionate to any franchisee's contributions. This means that the amount a franchisee contributes to the cooperative does not necessarily dictate the level of advertising benefit or expenditure they receive in their specific area. The Regional Advertising Cooperative has discretion in how it allocates funds.
Bonchon's FDD specifies that the Regional Advertising Cooperative can use its funds for various advertising and administrative purposes. These include developing advertising ideas, conducting market research, preparing advertising campaigns, placing and paying for regional marketing, employing advertising agencies, and administering the cooperative. The funds also cover the costs of advertising specific to the region, including television, radio, print, digital, and internet advertising campaigns.
This arrangement allows the Regional Advertising Cooperative to focus on the most effective advertising strategies for the entire region, rather than being restricted to spending based solely on individual franchisee contributions. However, franchisees are still required to make their payments to the Regional Advertising Cooperative, and failure to do so can be a breach of the franchise agreement.