Can the required System Brand Fund contribution for Bonchon franchisees change during the term of the Franchise Agreement?

According to Bonchon's 2025 Franchise Disclosure Document, the System Brand Fund contribution can change during the term of the Franchise Agreement. Franchisees must contribute up to 4% of their previous week's Gross Revenues to the System Brand Fund. While the contribution amount may change, it will not exceed 4.0% of Gross Revenues. All Bonchon franchisees are required to contribute at the same rate, unless prohibited by law. Bonchon businesses that the company or its affiliates operate may contribute to the fund, but are not required to do so.

Bonchon has control over all advertising programs, including creative concepts, materials, media used, and media placement. The company does not need to make expenditures equivalent or proportionate to a franchisee's contributions, nor does it need to ensure that any particular franchisee benefits directly or proportionately from advertising funded by the System Brand Fund. The fund is not a trust, and Bonchon is not a fiduciary.

The System Brand Fund may be used to cover the costs of administering, directing, preparing, placing, and paying for advertising at the national, regional, or local level. This includes various forms of media, marketing, and promotional materials, as well as activities such as consumer research, website maintenance, search engine optimization, and engagement of advertising agencies. For the fiscal year ending December 31, 2024, Fund income was spent in the following approximate amounts: 18.8% on media production; 35.8% on media placement; 2.2% on merchandising development; 14.8% on administrative expenses; 17.6% on promotional expenses; 0.8% on brand development; and 10% on other items (including, research and testing and franchisee advertising support).

Bonchon can use any media, create any programs, and allocate brand funds to any regions or localities it deems appropriate. The company may also provide rebates to individual franchisees for local advertising expenditures if national or regional advertising programs are not effective in certain areas. If the total System Brand Fund contributions are insufficient for a meaningful advertising campaign, Bonchon may rebate all or a portion of the contributions to franchisees on a proportionate basis, which must be spent on approved local advertising according to a plan and budget reviewed and approved by Bonchon. Franchisees must document all rebate advertising expenditures in a monthly report.