Under what condition related to alcohol sales will a Bonchon franchisee be required to pay increased percentages of Gross Revenues not deriving from alcohol sales for the System Brand Fund Contribution?

According to Bonchon's 2025 Franchise Disclosure Document, a Bonchon franchisee will be required to pay increased percentages of Gross Revenues not deriving from alcohol sales for the System Brand Fund Contribution if a state or local law in which their Bonchon Business is located prohibits or restricts in any way their ability to pay and Bonchon's ability to collect the System Brand Fund Contribution derived from the sale of alcoholic beverages at their Restaurant. This situation is defined as an "Alcohol Restriction Law".

In practical terms, this means that if a franchisee operates in an area where laws limit the ability to collect the System Brand Fund Contribution from alcohol sales, Bonchon will adjust the percentage applied to the franchisee's non-alcohol revenue to ensure Bonchon receives the same amount it would have received without the restriction. This adjustment ensures that the System Brand Fund, used for advertising and promotion, is not negatively impacted by local regulations on alcohol sales.

For a prospective franchisee, this condition highlights the importance of understanding local and state laws regarding alcohol sales and their potential impact on franchise fees. It also demonstrates Bonchon's strategy to maintain consistent revenue for the System Brand Fund, regardless of varying local regulations. Franchisees should be aware that their financial obligations to the System Brand Fund could be affected by these laws, potentially increasing the percentage of non-alcohol revenue allocated to this fund.