What are the specific obligations of a Bonchon franchisee regarding the reporting of Gross Revenues (Item 6), and how does the franchisor monitor compliance with these obligations?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
eded the Average Annual Sales, with the highest Annual Sales earned being $1,025,253 and the lowest Annual Sales earned being $308,574.
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.
The Gross Revenues information for Mature Franchised Restaurants were obtained from weekly royalty reports submitted by franchisees to us and information we polled from point-of-sale systems in the Restaurants. We have not independently audited that information. You should conduct an independent investigation of the costs and expenses you will incur in operating your BONCHON Restaurant. Franchisees or former franchisees, listed in this Disclosure Document, may be one source of this information.
This financial performance representation was prepared without an audit. Written substantiation of all financial information presented in this financial performance representation will be made available to you upon reasonable request.
Some Bonchon Restaurants have earned this amount. Your individual results may differ. There is no assurance that you'll earn as much.
Other than the preceding financial performance representation, Bonchon Franchise LLC does not make any financial performance representations. We also do not authorize our employees or representatives to make any such representations either orally or in writing. If you are purchasing an existing outlet, however, we may provide you with the actual records of that outlet. If you receive any other financial performance information or projections of your future income, you should report it to the franchisor's management by contacting Suzie Tsai, Bonchon Franchise LLC, 15660 North Dallas Parkway, Suite 1150, Dallas, TX 75248, (469) 482-1402, the Federal Trade Commission, and the appropriate state regulatory agencies.
ITEM 20 OUTLETS AND FRANCHISEE INFORMATION
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What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, franchisees are obligated to accurately report their Gross Revenues, which are defined as all income derived from the Restaurant business, whether received in cash, services, or credit. Gross Revenues exclude documented refunds, chargebacks, credits, allowances given to customers in good faith, and sales taxes legally charged to customers. Franchisees typically submit weekly royalty reports, and Bonchon may also poll information from the point-of-sale (POS) systems at the Restaurants to monitor Gross Revenues.
Bonchon monitors compliance with revenue reporting obligations through audits. If an audit reveals that a franchisee's weekly report understated Gross Revenues by 5% or more for any week or the entire examination period, it can trigger consequences outlined in the franchise agreement. Similarly, if a franchisee submits three or more weekly reports that each understate Gross Revenues by between 2% and 5% during a 36-week period, this also constitutes a breach of the agreement.
Refusing Bonchon permission to inspect or conduct operational and financial audits is also a violation. Other serious violations include misappropriating employee tax withholdings, engaging in dishonest practices with employees, customers, or suppliers, or making willful misrepresentations to governmental authorities regarding the Bonchon business. These actions can lead to termination of the franchise agreement.
Prospective franchisees should understand the importance of accurate financial reporting and the potential consequences of underreporting revenues. Bonchon emphasizes that the Gross Revenues information they provide is unaudited, and franchisees should conduct their own independent investigation of costs and expenses. Franchisees should maintain meticulous records and ensure their POS systems accurately reflect all transactions to avoid discrepancies during audits.