What is the Bonchon System Brand Fund Contribution that Bonchon franchisees must pay?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree to pay us a weekly System Brand Fund Contribution equal to up to 4.0% of your prior week's Gross Revenues (as defined in Section 5.05). Currently, your System Brand Fund Contribution is 1.5% of your prior week's Gross Revenues. These System Brand Fund Contributions will be expended as provided for in Section 10.01 below. We may, in our business judgment, change the required System Brand Fund Contribution during the term of this Agreement upon notice to you, but in no event shall it be more than 4.0% of Gross Revenues.
If a state or local law in which your Bonchon Business is located prohibits or restricts in any way your ability to pay and our ability to collect the System Brand Fund Contribution derived from the sale of alcoholic beverages at your Restaurant (an "Alcohol Restriction Law"), you will be required to pay whatever increased percentages of all Gross Revenues not deriving from the sale of alcohol are necessary so that the System Brand Fund Contribution you pay equals the System Brand Fund Contribution you would make if you were not subject to an Alcohol Restriction Law.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, franchisees must pay a weekly System Brand Fund Contribution. This contribution can be up to 4.0% of the prior week's Gross Revenues. Currently, however, the System Brand Fund Contribution is 1.5% of the prior week's Gross Revenues. Bonchon retains the right to modify the required System Brand Fund Contribution during the term of the Franchise Agreement, but it will not exceed 4.0% of Gross Revenues. These contributions will be used as provided for in Section 10.01 of the agreement.
If a state or local law restricts Bonchon's ability to collect the System Brand Fund Contribution derived from alcohol sales, the franchisee will be required to pay increased percentages of all Gross Revenues not deriving from the sale of alcohol. This ensures that the System Brand Fund Contribution equals what it would be without the alcohol restriction.
Prospective franchisees should be aware that this contribution is mandatory and ongoing. It directly impacts their weekly revenue and must be factored into their financial projections. Franchisees should also monitor any potential changes to the contribution rate, although it is capped at 4.0% of Gross Revenues. Understanding the specific allocation of these funds, as detailed in Section 10.01, is crucial for franchisees to assess the value and effectiveness of the advertising and marketing efforts supported by their contributions.