Under what conditions will the weekly Continuing Royalty rate be tripled to 15.0% for a Bonchon Business?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
From the opening date of your Bonchon Business and continuing through the end of the Initial Term of the Franchise Agreement, you agree to pay us a weekly Continuing Royalty equal to 5.0% of your previous week's Gross Revenues, as defined in Section 5.05. The Continuing Royalty is solely in consideration of our granting you the franchise conferred by this Agreement and is not in exchange for any particular goods, services or assistance we may furnish you.
If you are operating your Bonchon Business while you are in material default of any provision of this Agreement other than those defaults enumerated in Section 17.01 or 17.02, the weekly Continuing Royalty rates set forth above will be tripled to 15.0% for each and every one of your operating Bonchon Businesses during a period commencing on the date you receive from us a written notice of material default and ending on the date the material default is cured.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the standard weekly Continuing Royalty is 5.0% of the previous week's Gross Revenues. However, this rate can be significantly increased under specific circumstances.
If a Bonchon franchisee is in material default of any provision of the Franchise Agreement (excluding defaults specified in Sections 17.01 or 17.02), the weekly Continuing Royalty rate will be tripled to 15.0%. This increased rate applies to each of the franchisee's operating Bonchon Businesses.
The 15.0% royalty rate takes effect from the date the franchisee receives written notice of the material default from Bonchon and continues until the default is cured. This represents a substantial increase in fees and highlights the importance of adhering to the Franchise Agreement to avoid such penalties.