Under what circumstances does the Franchise Agreement Rider – 2025 Development Incentive Program for Bonchon apply, specifically concerning the Area Development Agreement?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
te: | By: Name: Title: Date: If an individual: By: Name: Date: |
EXHIBIT G-3 – FRANCHISE AGREEMENT RIDER 2025 EXISTING FRANCHISEE DEVELOPMENT INCENTIVE PROGRAM (NEW AREA DEVELOPERS)
AREA DEVELOPMENT AGREEMENT RIDER – 2025 DEVELOPMENT INCENTIVE PROGRAM
| THIS AREA DEVELOPMENT | AGREEMENT RIDER – 2025 DEVELOPMENT |
|---|---|
| INCENTIVE PROGRAM | (this "Rider") supplements and amends that certain Area Development Agreement, dated as of (the "Area Development Agreement"), between Bonchon Franchise LLC ("Franchisor") and |
| ("Area Developer"). | This Rider is incorporated into the Area Development Agreement and is dated and effective as of the date of execution of the Area Development Agreement. In the event of any ambiguity or conflict between the terms of this Rider and the terms of the Area Development Agreement, the terms of this Rider shall control and prevail. All initial capitalized terms used but not defined in this Rider shall have the meanings given to those terms in the Area Development |
| Agreement. |
Background
Simultaneously with signing this Rider, Franchisor and Developer are signing the Area Development Agreement, wherein Developer is granted the right and undertakes the obligation to develop [___ (#)] Bonchon Restaurants (the "Restaurants") in a certain Development Territory in accordance with the Development Schedule outlined in Section 6.01 of the Area Development Agreement. Franchisor offers a development incentive program to area developers signing an area development agreement for a minimum of three (3) Restaurants on or before December 31, 2025 (the "2025 Development Incentive Program"). Under the 2025 Development Incentive
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the Franchise Agreement Rider – 2025 Development Incentive Program applies when a franchisee (or area developer) signs an Area Development Agreement for a minimum of three Bonchon Restaurants on or before December 31, 2025. This incentive program aims to encourage new development by offering reduced fees and royalties to qualified area developers. The rider modifies certain sections of the franchise agreement to reflect the incentives offered under the 2025 Development Incentive Program.
To qualify for the 2025 Development Incentive Program, the area developer must open their franchised restaurants no later than the Scheduled Opening Dates outlined in Section 6.01 of the Area Development Agreement. If these conditions are met, the developer will benefit from a reduced Initial Franchise Fee of $20,000 and a lower weekly Continuing Royalty rate of 2.5% of the developer's previous week's Gross Revenues for the first full 12 months of operations. After this initial period, the weekly Continuing Royalty rate will increase to 5.0% of the Area Developer's previous week's Gross Revenues.
The Franchise Agreement Rider ensures that the incentives are applied to each franchise agreement executed under the Area Development Agreement, provided that the restaurants open and commence operations according to the rider's terms. The rider also stipulates that to receive the incentives, the restaurant must open to the public by its scheduled opening date, and the area developer must be in full compliance with the Area Development Agreement and all other agreements with Bonchon. This compliance extends to any approved franchisee affiliates operating franchised businesses under the Area Development Agreement, ensuring they also adhere to their respective franchise agreements.