Under the management service agreement, what was the total management fee charged to Bonchon in 2022?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
December 26, 2018, the Licensor assigned all rights, title and interest in the trademark to the Ultimate Parent and the Company entered into a new license agreement with the Ultimate Parent under the same terms.
Related-party revenues
The Company receives franchisee advertising fees from locations owned and operated by the Parent and entities related through common ownership of the Parent. For the years ended December 31, 2024, 2023 and 2022, summary of franchisee advertising fees earned from these related parties are as follows:
| 2024 | 2023 | 2022 | |
|---|---|---|---|
| Bonchon U.S.A., Inc. | $ 51,666 | $ 61,341 | $ 50,268 |
| Bonchon Allston LLC | 36,231 | 45,850 | 37,218 |
| 267W LLC | 8,504 | - | - |
| Total | $ 96,401 | $ 107,191 | $ 87,486 |
As of Dece
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the company entered into a management service agreement with Bonchon Holdings LLC (BH) on January 1, 2022. BH is an affiliated entity related through common ownership of the Parent company. As part of this agreement, Bonchon agreed to reimburse BH for actual costs incurred, plus a 5% markup, for management and administrative support services.
For the year ending December 31, 2022, the total management fee charged to Bonchon under this agreement was $5,746,720. This amount is included within "Selling, general and administrative expenses" in Bonchon's statements of income and changes in member's equity.
It's important for a prospective franchisee to understand these related-party transactions, as they can impact the overall financial performance of Bonchon and, consequently, the support and services available to franchisees. Understanding the nature and magnitude of these fees helps in assessing the financial stability and operational efficiency of the franchisor.