Risk Score
Pending analysis
Investment Range
$262,782 - $1,312,626
Franchise Fee
$20,000
Total US Locations
147
Business Summary
Bonchon Franchise LLC franchises Bonchon branded restaurants that specialize in selling Korean style fried chicken, along with complementary appetizers, side dishes, and beverages. Bonchon offers franchisees the choice to operate one of four restaurant concepts: Dine-In, Fast Casual, Delivery and Carryout Only, or Remote Kitchen restaurants. Dine-In restaurants are full-service with a broad menu and a full bar, while Fast Casual are counter-service with a more limited menu focusing on chicken. Delivery and Carryout Only restaurants are smaller, primarily serving off-premises consumption, and Remote Kitchens are compact units focused exclusively on off-premises sales through pick-up and third-party delivery services. Bonchon restaurants are known for their unique, crunchy, twice-fried chicken coated with proprietary sauces.
Corporate History
Bonchon Franchise LLC was organized in New York in June 2011 and began offering franchises in August 2011. The brand's origins trace back to its affiliate and predecessor, Bonchon Restaurant Company, which was formed in Korea in November 2002, later incorporated as Bonchon International Inc. in June 2009. Bonchon International operated a Bonchon Restaurant in Korea from 2002 to 2006 and started licensing its proprietary sauces internationally in April 2007. Currently, Bonchon International focuses on global franchise and licensing arrangements, expanding the brand across various countries. Bonchon Franchise LLC is a wholly-owned subsidiary of Bonchon U.S.A., Inc., which itself is a wholly-owned subsidiary of Bonchon International.
Financial Overview
Investment Range
$262,782 - $1,312,626
Franchise Fee (Low)
$20,000
Franchise Fee (High)
$35,000
Royalty %
5%
Marketing %
1.5%
Equipment Costs (Low)
$140,000
Equipment Costs (High)
$950,000
Working Capital
$40,000
Audited Financials
Yes
Offers Financing
No
Audit Opinion
Unqualified opinion
Financial Health Notes
Bonchon Franchise LLC shows a declining trend in net income, from over $2 million in 2022 to approximately $387,555 in 2024. In 2024, the company recognized a significant 'Abandonment of project' expense of $438,413. Despite this, Bonchon Franchise LLC maintains a healthy cash balance of approximately $4.9 million in 2024 and member's equity has increased from 2023 to 2024. The independent auditors, in their report, did not express any substantial doubt about Bonchon Franchise LLC's ability to continue as a going concern.
Financing Details
Bonchon Franchise LLC does not offer any direct or indirect financing to its franchisees. Additionally, Bonchon Franchise LLC does not guarantee any franchisee notes, leases, or other obligations.
Performance Metrics
Total US Locations
147
Franchised Units
143
Corporate Units
4
Avg Square Footage
1,575
Franchising Since
2011
Legal & Compliance Analysis
Recent Litigation
Yes
Bankruptcy
No
Litigation Count
2
Litigation Summary
Bonchon Franchise LLC has disclosed two litigation matters. The first case, filed April 24, 2023, involved Bonchon (including Bonchon Franchise LLC) suing former franchisees for trademark infringement, trade dress infringement, unfair competition, and breach of contract. These former franchisees allegedly continued to operate their restaurants under the 'Bonchon' name after their agreements were terminated in September 2022 due to material breach. A preliminary injunction was issued in August 2023. Subsequently, in April 2024, two individual defendants filed for Chapter 7 bankruptcy, leading to Bonchon discontinuing its lawsuit in September 2024. The second matter was a Consent Order from the State of Washington Department of Financial Institutions, Securities Division, issued January 6, 2020. This arose after Bonchon discovered in March 2019 that its previous accountant was unqualified to prepare audited financial statements and had made errors. Bonchon promptly halted franchise sales, engaged a new accounting firm, and prepared new statements. The Consent Order required Bonchon to comply with the Washington Franchise Investment Protection Act and pay $250 in investigative costs, without admitting or denying the findings.
Bankruptcy History
Bonchon Franchise LLC has no bankruptcy history to report for itself or its executives in Item 4. However, Item 3 mentions that two individual defendants in a recent lawsuit against Bonchon Franchise LLC, Young C. Ham a/k/a Ryan Ham and Sophia Sunmin Hahm a/k/a Sun Min An, filed for Chapter 7 bankruptcy on April 8, 2024. This resulted in the discharge of certain debts they had guaranteed under the terminated franchise agreements.
Agreement Terms
Initial Term
10 years
Renewal Term
5 years
Renewal Conditions
To renew their agreement for two consecutive five-year terms, Bonchon franchisees must operate in an area where Bonchon Franchise LLC is still offering franchises. They must notify Bonchon of their intent to renew between six and nine months before their current term expires. Franchisees are required to have maintained good standing by complying with all terms of the Franchise Agreement and Manuals throughout the initial term, and they must be current on all monetary obligations to Bonchon, its affiliates, landlord, and suppliers. Prior to renewal, franchisees must update, refurbish, or remodel their restaurant to meet Bonchon's then-current standards, complete any required training, and pay a successor term fee of 25% of Bonchon's current Initial Franchise Fee for Bonchon Businesses. They must also provide satisfactory evidence of lease renewal or a new approved location without business interruption, and sign a general release. If the franchisee is also an area developer, they must have fulfilled their development obligations.
Training & Support Program
Franchisor Assistance
Bonchon Franchise LLC provides extensive assistance to its franchisees, both before and after a restaurant opens. Pre-opening support includes approving or disapproving proposed restaurant sites and leases, reviewing final construction plans, and specifying necessary accounting and Management Information Systems (MIS). Bonchon also supplies franchisees with a confidential operations manual and recipe manual, and sells proprietary products. Franchisees, their Operating Principals, General Managers, Managers, and Area Managers receive initial training programs at no additional cost. For the first three restaurants, Bonchon dispatches 3 to 4 trainers for 12-14 days around the opening date to provide on-site training and operational support, with franchisees responsible for the trainers' lodging, travel, and meal expenses. Post-opening, Bonchon Franchise LLC offers ongoing field support services through various communication modes like on-site visits, off-site sessions, and telephonic or electronic consultation. Franchisees can contact headquarters for guidance. Bonchon also provides standard electronic accounting forms, directs national, regional, and local advertising programs through a System Brand Fund (with franchisees contributing a percentage of gross revenues), and may establish regional advertising cooperatives. Additionally, Bonchon provides merchandising materials and requires participation in its gift card program and the use of specified computer and point-of-sale systems, as well as designated internet and phone service providers.
Initial Training Hours
91
Training Location
Bonchon Restaurant Support Center Dallas, TX and/or a Bonchon Training Restaurant
Ongoing Support
After opening, Bonchon Franchise LLC provides ongoing field support services, supervision, and assistance to its franchisees through on-site visits, off-site sessions, and telephonic or electronic communication. Franchisees can contact Bonchon's headquarters for consultation and guidance on restaurant operations and management. Bonchon may also develop additional training programs that franchisees or their Operating Principals and designated staff may be required to attend, and franchisees are also required to attend annual conferences or conventions. Bonchon directs all advertising programs through a System Brand Fund, controlling creative concepts, media, and allocation, and may establish regional advertising cooperatives. Franchisees are provided with merchandising materials and must participate in Bonchon's gift card program, reimbursing a monthly service fee. Franchisees are also required to use specific computer and point-of-sale systems and designated internet and phone service providers, with mandates for upgrades and proper data reporting.
Franchise Requirements
Ideal Candidate Profile
Bonchon is seeking franchisees who are committed to the proper and effective operation of their Bonchon restaurant, dedicating the necessary time and effort. Franchisees are required to personally supervise the business or designate an approved Operating Principal who holds a majority interest or is otherwise approved, and who possesses complete decision-making authority. This Operating Principal, along with a General Manager, a second full-time manager, and for those opening a third business, an Area Manager, must attend and successfully complete the mandatory Initial Training Program or Partner Training Program. All key managers must also obtain Bonchon-approved nationally accredited food manager certifications and any local safe food handling courses. Franchisees should be familiar with federal, state, and local laws governing the restaurant and foodservice industry, including health regulations and licensing. They must uphold high standards of honesty, integrity, and fair dealing in all business interactions.
Industry Experience Required
No
Management Experience Required
No
Sales Experience Required
No
Technical Skills Required
No
Operational Details
Location Type
Retail
Owner Participation
Supervisory
Territory Type
Protected
Staff Count
22
Territory Size Requirements
Bonchon Franchise LLC defines the Protected Territory for a Bonchon Business based on market area factors such as population density and drive times. While there is no fixed minimum or maximum size, the radius for a standard Bonchon restaurant is generally expected to be between 0.25 miles and 3 miles from the location. For Remote Kitchen Restaurants, the Protected Territory will be no greater than a 0.1-mile radius. In high-density population centers, the Protected Area is determined on a case-by-case basis.
Staffing Notes
Bonchon Franchise LLC requires franchisees to staff their restaurants with a competent, conscientious, and trained team. Each Bonchon restaurant must have at least one manager on duty during all operating hours, and a minimum of two certified and fully trained individuals present at all times. Required management roles include a General Manager and a Manager (who may be an assistant or kitchen manager) for each restaurant. For franchisees operating their third Bonchon business, an Area Manager is also required to oversee all Bonchon restaurants; this individual must be certified to manage multi-unit operations and hold a Bonchon-approved nationally accredited food manager certification. All designated managers and the Operating Principal are required to successfully complete initial training programs. The estimated number of employees ranges from 14 to 49 for Dine-In, Fast Casual, or Delivery and Carryout Only Restaurants, and 10 to 17 for Remote Kitchen Restaurants.