Under what conditions will the weekly Continuing Royalty rate be tripled for a Bonchon franchise?
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, the standard weekly Continuing Royalty fee is 5.0% of the previous week's gross revenues. However, this rate can be tripled to 15.0% under specific circumstances related to defaults on the Franchise Agreement.
Specifically, if a Bonchon 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. This increased rate applies to each of the franchisee's operating Bonchon businesses and restaurants.
The tripled royalty rate takes effect from the date the franchisee receives written notice of the default from Bonchon and continues until the default is fully corrected or 'cured'. This provision serves as a significant financial penalty for non-compliance with the Franchise Agreement, incentivizing franchisees to adhere to its terms. Franchisees should carefully review Sections 17.01 and 17.02 of the Franchise Agreement to understand which types of defaults would NOT trigger the royalty rate increase.