When does the tripled Continuing Royalty rate for a Bonchon franchise begin if I am in default?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are operating your Bonchon Business while you are in default of any provision of the Franchise Agreement other than those defaults listed in Sections 17.01 or 17.02, the weekly Continuing Royalty rates above will be tripled (and will therefore be 15.0%) for each and every one of your operating Bonchon Businesses and Restaurants during a period beginning on the date you receive from us a written notice of default and ending on the date the default is fully cured.
Source: Item 6 — OTHER FEES (FDD pages 13–24)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, if a franchisee is in default of any provision of the Franchise Agreement (excluding defaults listed in Sections 17.01 or 17.02), the weekly Continuing Royalty rate will be tripled. The standard weekly Continuing Royalty is 5.0% of the previous week's Gross Revenues. Therefore, the rate will increase to 15.0%.
The increased royalty rate applies to each of the franchisee's operating Bonchon businesses and restaurants. This tripled rate begins on the date the franchisee receives written notice of default from Bonchon.
The tripled Continuing Royalty rate remains in effect until the franchisee fully cures the default. This means that the franchisee must take all necessary steps to correct the issue that led to the default to revert to the standard royalty rate. It is important for prospective franchisees to understand the default provisions in the Franchise Agreement and to take steps to avoid any actions that could trigger a default and the associated increase in royalty payments.