Is the Bonchon System Brand Fund considered a trust?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
We will direct all advertising programs and control the creative concepts, materials and media used, media placement and allocation. We need not make expenditures for you which are equivalent or proportionate to your contributions. We need not ensure that any particular franchisee benefits directly or proportionately from Fund advertising. The Fund is not a trust and we are not a fiduciary.
The Fund may be used to meet all costs of administering, directing, preparing, placing and paying for national, regional or local advertising. 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; consumer research, menu and promotion analytics tracking; interviews and related activities; the creation, maintenance and periodic modification of the Bonchon website; reviewing any advertising material you propose to use (as provided below); search engine optimization; establishing a third party facility for customizing local advertising materials; accounting for System Brand Fund receipts and expenditures; attendance at industry related conventions, shows or seminars; advertising at sports events; sports team sponsorships; mailers, door hangers, freestanding inserts/coupons, brochures and sponsorships; mystery shoppers (both for the Bonchon System and for competitive networks or units); celebrity endorsements; influencer marketing; related retainers; association dues (including the International Franchise Association); social media programs on the internet; cellular telephone and smartphone media programs; gift cards; customer loyalty programs; other activities that we believe in our sole judgment are appropriate to enhance, promote and/or protect the Bonchon System; 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.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 45–60)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the System Brand Fund is not a trust, and Bonchon is not a fiduciary. Bonchon directs all advertising programs and controls the creative concepts, materials, media used, media placement, and allocation. Bonchon does not need to make expenditures for franchisees that are equivalent or proportionate to their contributions, nor do they need to ensure that any particular franchisee benefits directly or proportionately from Fund advertising.
Bonchon can use the Fund to meet all costs of administering, directing, preparing, placing, and paying for national, regional, or local advertising. This includes various forms of media, marketing, public relations, promotional materials, consumer research, website maintenance, search engine optimization, accounting for System Brand Fund receipts and expenditures, attendance at industry events, advertising at sports events, sponsorships, mailers, social media programs, gift cards, customer loyalty programs, and engaging advertising agencies.
Bonchon is not required to maintain the money paid by franchisees to the Fund and income earned by the Fund in a separate account. However, Bonchon may not use this money for any purposes other than those provided for in the Franchise Agreement. Bonchon can spend money from the Fund for their reasonable administrative costs and overhead for activities reasonably related to the administration of the Fund and advertising programs for franchisees.