What are the specific conditions under which a Bonchon franchisee might have qualified for a reduced Initial Franchise Fee in 2024, as mentioned in Item 5?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
TEM 5 INITIAL FEES**
If you will open a single Bonchon Business, the Initial Franchise Fee is $35,000 which you must pay in full on the date you sign the Franchise Agreement. Last year, franchisees who qualified for our 2024 development incentive program and met the conditions thereunder paid a reduced Initial Franchise Fee. We will not refund any portion of the Initial Franchise Fee.
If you will operate under an Area Development Agreement (in which case you must agree to develop and operate two or more Bonchon Businesses and Restaurants), you must pay an Area Development Fee equal to: (i) the Initial Franchise Fee for the first Bonchon Business that you will develop, plus a $10,000 deposit for each subsequent Bonchon Business you are required to develop, own and operate (the "Area Development Deposit") when you sign the Area Development Agreement. The Area Development Deposit for each Bonchon Restaurant Business will be applied against the Initial Franchise Fee for that Bonchon Restaurant Business which would otherwise be payable. The Area Development Fee is fully earned when paid and it is not refundable under any circumstances. Your Initial Franchise Fee for each Bonchon Restaurant Business you open under the Area Development Agreement will be calculated according to the
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the standard Initial Franchise Fee for a single Bonchon Business is $35,000. However, in 2024, some franchisees qualified for a reduced Initial Franchise Fee by meeting the conditions of Bonchon's 2024 development incentive program. The specific requirements of the 2024 development incentive program are not detailed in this document.
Bonchon also offers a development incentive program in 2025. If a franchisee and Bonchon enter into a Franchise Agreement on or before December 31, 2025, under an existing Area Development Agreement (ADA) that was previously executed, and the franchisee opens the Restaurant no later than the Scheduled Opening Date listed in the Area Development Agreement, then the Initial Franchise Fee will be reduced to $20,000. The weekly Continuing Royalty rate will also be reduced to 2.5% of the previous week's Gross Revenues for the first full 12 months of operations, after which it will increase to 5.0%. To receive these incentives, a rider to the Franchise Agreement must be executed for each Restaurant the franchisee commits to develop under the Existing ADA.
Bonchon also provides a $10,000 discount on the Initial Franchise Fee for the development of their first Bonchon Business to veterans of the United States military who meet specific requirements. To qualify, the applicant must: (i) be a United States military veteran; (ii) have been honorably discharged from any branch thereof; (iii) provide Bonchon with a certified copy of their Certificate of Release or Discharge from Active Duty (DD 214 Form) evidencing their honorable discharge; (iv) own a majority interest in the Bonchon Business; (v) otherwise meet the requirements of Bonchon's program; and, (vi) request participation in the program prior to signing the Franchise Agreement. Bonchon may modify or discontinue the United States Military Veteran discount program at any time at its sole discretion.
To gain a comprehensive understanding of the 2024 development incentive program, a prospective franchisee should directly inquire with Bonchon about the specific conditions that were in place during that year. This will help determine if any similar incentives or programs might be available or under consideration in the future.