Can Bonchon use money from the System Brand Fund for administrative costs and overhead?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
money for any purposes other than those provided for in the Franchise Agreement. We can spend money from the Fund for our reasonable administrative costs and overhead for activities reasonably related to the administration of the Fund and advertising programs for franchisees, including, for example, preparing marketing and advertising materials; working with advertising agencies, advertising placement services and creative talent; collecting Fund contributions and preparing an accounting of contributions to the Fund and the annual statement of Fund contributions and expenditures described below; the Fund's administrative costs; travel expenses of personnel while they are on Fund business; meeting costs, including franchisee conferences; overhead relating to Fund business; a management fee for us (or an affiliate); and other expenses we incur in activities reasonably related to administering or directing the Fund and its programs, including taxes we must pay on Fund contributions we receive; conducting market research, public relations, and creating, preparing, and producing advertising, promotions, and marketing materials; and, otherwise devoting our personnel, resources and/or funds for the benefit of the Fund.
Within 60 days following the close of our fiscal year, we will prepare (but not audit) a statement detailing Fund income and expenses for the fiscal year just ended. We will send you a copy of this statement upon request.
We will spend most contributions to the Fund for advertising purposes during the fiscal year in which the contributions are made.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 45–60)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, Bonchon can use money from the System Brand Fund for administrative costs and overhead. Bonchon can spend money from the fund for reasonable administrative costs and overhead for activities related to the administration of the Fund and advertising programs for franchisees. These activities include preparing marketing and advertising materials, working with advertising agencies, collecting Fund contributions, preparing an accounting of contributions, covering the Fund's administrative costs, personnel travel expenses, meeting costs, overhead relating to Fund business, and management fees.
Bonchon can also use the funds to pay taxes on Fund contributions, conduct market research and public relations, and create advertising, promotions, and marketing materials. Bonchon may devote personnel, resources, and funds for the benefit of the Fund. For the fiscal year ending December 31, 2024, 14.8% of the Fund income was spent on administrative expenses.
This means that a portion of the money franchisees contribute to the System Brand Fund can be used by Bonchon to cover the costs of managing the fund and its associated advertising and marketing activities. While this is a common practice in franchising, prospective franchisees should be aware of how their contributions are being allocated and ensure that the administrative costs are reasonable and contribute to the overall benefit of the Bonchon system.