Detailed Information on Bonchon’s Initial Franchise Fee, Royalty Fee + 32 Other Fees (Items 5 and 6, 2023 FDD)

1.  Initial Franchise Fee:  $40,000

• If you will open a single Bonchon Business, the Initial Franchise Fee is $40,000, which you must pay in full on the date you sign the Franchise Agreement. Bonchon will not refund any portion of the Initial Franchise Fee under any circumstances.

• To provide support to the veterans of the United States military, Bonchon offers qualified applicants a $10,000 discount on the Initial Franchise Fee for the development of their first Bonchon Business.

2.  Area Development Fee:  the Initial Franchise Fee for the first Bonchon Business that you will develop, plus a $10,000 deposit for each subsequent Bonchon Business you are required to develop, own, and operate

• If you will operate under an Area Development Agreement (in which case you must agree to develop and operate two or more Bonchon Businesses and Restaurants), you must pay an Area Development Fee equal to the Initial Franchise Fee for the first Bonchon Business that you will develop, plus a $10,000 deposit for each subsequent Bonchon Business you are required to develop, own, and operate (the “Area Development Deposit”) when you sign the Area Development Agreement.

• The Area Development Deposit for each Bonchon Restaurant Business will be applied against the Initial Franchise Fee for that Bonchon Restaurant Business which would otherwise be payable.

• The Area Development Fee is fully earned when paid and it is not refundable under any circumstances.

• Your Initial Franchise Fee for each Bonchon Restaurant Business you open under the Area Development Agreement will be calculated according to the following schedule:

• Businesses 1-2 in Development Schedule:  $40,000
• Businesses 3-5 in Development Schedule:  $35,000
• Businesses 6-10 in Development Schedule:  $30,000
• Businesses 11 and more in Development Schedule:  $25,000

• Bonchon uses the proceeds from Initial Franchise Fees and Area Development Fees to defray a portion of its expenses in connection with the sale and establishment of franchises, such as:  (1) costs related to developing and improving its services; (2) expenses of preparing and registering the disclosure document; (3) legal fees; (4) accounting fees; (5) costs of obtaining and screening franchisees; and (6) general administrative expenses.

3.  Various Cooking Utensils:  $1,988 to $2,131

• Before your Business opens, you must purchase from Bonchon’s affiliate Bonchon LLC various cooking utensils at an estimated cost ranging between $1,988 and $2,131.

• These costs are not refundable.

4.  Continuing Royalty:  5.0% of previous week’s Gross Revenues after first 12 months of operations and continuing throughout the remainder of the Initial Term.

• While in default of any provision of the Franchise Agreement (other than those defaults listed in Sections 17.01 or 17.02), 15.0% of previous week’s Gross Revenues (after first 12 months of operations).

• Due Date:  Payable weekly on Tuesday of the next week.

• “Gross Revenues” includes all revenues from the franchised Business.

5.  System Brand Fund Contribution:  up to 4.0% of Gross Revenues (currently, it is 1.5% of Gross Revenues)

• Due Date:  Same as Continuing Royalty.

• Contribution percentage may change during term of Franchise Agreement, but in no event more than 4.0% of Gross Revenues. Currently, it is 1.5% of Gross Revenues.

6.  Required Minimum Expenditure for Local Advertising: per New Restaurant Marketing Plan, a minimum total of $5,000 over the course of the period beginning one month before scheduled opening and ending three months after opening; then on average: the greater of $1,166 per month or 1% of the preceding month’s Gross Revenues through the end of first full calendar year of operations and 2% of the previous year’s Gross Revenues for all subsequent years

• Due Date:  Over the course of the five-month period covered under the New Restaurant Marketing Plan; monthly for the first full calendar year of operations; and then annually thereafter.

• Required expenditure percentage will not change during term of Franchise Agreement.

• You must seek and obtain Bonchon’s approval for all categories and materials you wish to use in advertising before you use them.

• You must comply with Bonchon’s procedure for annual audit of local advertising expenditure.

7.  Advertising Cooperative:  when cooperative formed; minimum of 1% of Gross Revenues; maximum of 4% of Gross Revenues

• Due Date:  Established by cooperative.

• Bonchon may form an advertising cooperative for your area and establish fees payable to the cooperative.

• A company-owned Business will have a vote if it joins. Percentage may change within 1%-4% range and may only be more than 4% if the cooperative changes the maximum under its By-Laws.

8.  Proprietary and Other Designated Products:  varies

• Due Date:  Upon delivery of products to you.

• You must buy packaging items, cooking utensils, sweet sugar, brushes, pallets, and Bonchon’s proprietary sauce from Bonchon’s affiliate Bonchon LLC.

9.  Merchandise Cost:  as invoiced by Bonchon or 3rd party vendor

• Due Date:  Upon receiving invoice.

• Bonchon may provide certain merchandising materials to you such as menu panels, point of purchase advertising materials, System memorabilia, and other brand-relevant merchandise.

• Bonchon or its third-party vendor will invoice you for reasonable costs for such materials, plus the cost of shipping and insurance.

• Upon reasonable request, Bonchon will furnish you with documentation of those costs.

10.  Monthly Fees to Maintain Computer and Point of Sale System and Other Technology, and Support for Computer and Point of Sale System and Other Technology:  $1,000 to $3,000 monthly

11.  Technology Fee:  currently none, but can be instituted as high as 1% of Gross Revenue

• Due Date:  Monthly.

• Will be commensurate with the expenses Bonchon or its affiliates incur in providing upgraded or new technology to you.

12.  Testing Fee:  $1,000 to $2,500, depending on the nature and complexity of the testing necessary for the product or service you propose

• Due Date:  When Bonchon requests.

• Bonchon may test the product or service of any supplier you propose. Fee for testing pays for Bonchon’s expenses.

13.  Initial Training/Partner Training:  all living and transportation expenses of all trainees. The amounts are unknown and may vary depending upon factors such as the third-party supplier selected and the attendees’ distance from training. Replacement training charge: up to $5,500 per training.

• Due Date:  Fee for additional/replacement trainees due before beginning of training; expenses as incurred.

• Bonchon provides the Initial Training Program for you or your original Operating Principal (if applicable), and your original General Manager, your Manager, and your Area Manager free of cost.

• If you (if franchisee is an individual) or your Operating Principal (if franchisee is an entity) will not engage in the on-premises management of the Restaurant’s daily operations, then you or your Operating Principal must attend and successfully complete either Bonchon’s Initial Training Program or its Partner Training Program, which Bonchon will also provide free of cost.

• All replacement Operating Principals, General Managers, Managers, and/or Area Managers you appoint later must also attend and successfully complete Bonchon’s Initial Training Program or Partner Training Program, as applicable (but only if the replacement Operating Principal, General Manager, Manager, or Area Manager has not already attended and successfully completed the Initial Training Program or Partner Training Program).

14.  Replacement Training Fee:  $5,500 per attendee

• Due Date:  As incurred.

• If Bonchon reasonably concludes in its business judgment that either you (if an individual), your Operating Principal (if you are a business entity), your General Manager, and/or your Area Manager has failed to attend or successfully complete its Initial Training Program or Partner Training Program (as applicable) to its satisfaction in its business judgment, then (depending on the reason for such person’s failure to successfully complete the Initial Training Program or Partner Training Program) that person may re-enroll in Bonchon’s next scheduled Initial Training Program or Bonchon may require that you send a replacement attendee.

• In either case, you will be required to pay Bonchon the Replacement Training Fee for each individual who has to re-enroll in (or who is sent as a replacement attendee to attend) the Initial Training Program or Partner Training Program.

15.  On-Site Opening Training and Assistance Fee:  $6,500 to $9,500

• Due Date:  One week following your Restaurant opening.

• If you are entering into a Franchise Agreement for your first, second, or third Restaurant, then Bonchon will send 3 to 4 trainers to your Restaurant (depending on the Restaurant Concept that you will operate) for a period of 12 to 14 days surrounding your Restaurant’s opening to provide you with onsite training and assistance.

• While there is no fee for the actual training, you will be responsible for Bonchon’s trainers’ lodging, travel, and meals expenses. To cover these expenses, you will be required to pay Bonchon an on-site opening training fee (the “On-Site Opening Training and Assistance Fee”) equal to: (i) $6,500 if you will be operating a Fast Casual, Delivery and Carryout Only, or Remote Kitchen Restaurant or (ii) $9,500 if you will be operating a Dine-In Restaurant.

• If you are opening your fourth Restaurant or beyond, then Bonchon will (upon your request) send you 1 trainer and bill you for the actual travel, lodging, and meal expenses that the trainer incurs in providing you with this on-site training and assistance.

16.  Additional On-Site Training and Assistance:  $45 per trainer per day, plus lodging, transportation, and food

• Due Date:  When Bonchon requests.

• You can request additional on-site training and/or assistance at any time.

17.  On-Going Training:  expenses and training fees as Bonchon determines in its business judgment

• Due Date:  As incurred.

• Bonchon may from time to time develop additional training programs which you (if an individual), your Operating Principal, and/or other staff or personnel Bonchon designates either may or must attend and successfully complete.

• Bonchon may also hold an annual conference, convention, or training session. You and/or your Operating Principal must attend.

18.  Insurance:  estimated annual premium – $8,000 to $20,000

• Due Date:  As insurance carrier requires.

• Insurance company sets the premiums and you pay the insurance company, except that if you fail to pay premiums for required insurance, Bonchon may pay premiums and charge you for them.

• Premiums may vary depending upon factors such as the insurance company selected and your claims experience.

19.  Employee Uniforms:  these costs will vary depending on which elements of the employee uniform are needed

• Due Date:  As incurred.

20.  Open Space Camera Replacement Fee:  $494.49, plus applicable taxes and shipping

• Due Date:  As incurred.

• At the start of the construction of your Restaurant, Bonchon will loan you (and train you on how to use) an Open Space Camera to film your weekly site construction progress. Bonchon will provide the Open Space Camera to you free of charge. Once construction is complete, you will be required to return the Open Space Camera to Bonchon.

• In the event that the Open Space Camera is lost, damaged, or stolen, you will be responsible for replacing it.

21.  Relocation:  25% of the then-current Initial Franchise Fee, plus Bonchon’s costs and expenses associated with the relocation

• Due Date:  When Bonchon requests.

• If you wish to relocate your Restaurant, you must pay the fee set forth above and then reimburse Bonchon for any reasonable costs it incurs in considering your request.

22.  Taxes:  varies

• Due Date:  Promptly when due.

• You must pay Bonchon all taxes it pays, except for its corporate income taxes due to goods or services it furnishes to you, the Initial Franchise Fee, the Area Development Fee, or Continuing Royalties.

23.  Advances:  varies

• Due Date:  When Bonchon requests.

• You must pay Bonchon all amounts it advances to third parties for you.

24.  Late Charge:  late payment penalty of 20% and interest in the maximum amount law allows, or if no legal maximum, then 4% above the then-current Wall Street Journal prime rate of interest

• Due Date:  When Bonchon requests.

• You must pay a late payment penalty of 20% on any amounts not paid within 15 days of when they were due to Bonchon or its affiliates. You must also pay interest on any past due amounts to Bonchon.

25.  Late Charge (Failure to Submit Financial Statements and Tax Returns):  $50 per month

• Due Date:  Upon demand.

• You are required to submit certain financial statements and tax returns to Bonchon. If you fail to submit the financial statements and tax returns when due, Bonchon will charge you $50 per month for each month the financial statement and/or tax return is overdue.

26.  Audit Expenses:  the amount of the audit. Expenses are unknown and may vary depending upon factors such as the auditor selected.

27.  Successor Term Fee:  25% of then-current Initial Franchise Fee for Bonchon Businesses

• Due Date:  Before Bonchon signs an agreement for a Successor Term (“Successor Agreement”).

28.  Transfer Fee:  $15,000 or such greater amount as is necessary to reimburse Bonchon for its reasonable costs and expenses associated with the application for transfer

• Due Date:  Before Bonchon approves the transfer.

29.  On-Site Inspection Upon Transfer Fee:  $250 per inspector per day, plus lodging, transportation, and food

• Due Date:  When Bonchon requests.

• In the event you request permission to transfer your franchised Business, Bonchon will conduct an on-site inspection to determine whether there are any necessary repairs, modifications, etc. to the Restaurant that will need to be completed prior to or in connection with its approving the transfer.

• In connection with conducting this inspection, you must pay Bonchon a fee of $250 per inspector per day and reimburse it for the lodging, transportation, and food costs incurred in connection with conducting such inspection.

30.  Management Fee on Death or Disability:  greater of (a) two times the compensation paid to individual(s) Bonchon assigns to operate Business, or (b) 10% of Business’s weekly Gross Revenues

• From your death or disability or the death or disability of your last surviving owner (if you are a business entity), until a new Operating Manager assumes control, Bonchon may operate the Business, but will have no obligation to do so.

• If it does, then Bonchon will deduct its expenses from the Business’s Gross Revenues and pay itself the management fee.

• Management fee will be in addition to Continuing Royalties due Bonchon. It will remit any remaining funds to your Estate.

• Estate must pay Bonchon any deficiency in sums due it under the Franchise Agreement within 10 days of Bonchon notifying the Estate of deficiency.

31.  Liquidated Damages:  the average Continuing Royalties owed to Bonchon during the 12 months of operation preceding the effective date of the termination multiplied by the lesser of (a) 24 (being the number of months in two full years) or (b) the number of months remaining in the term of the Franchise Agreement (had it not been terminated)

• Due Date:  When Bonchon requests.

• If Bonchon terminates your Franchise Agreement for cause, you agree to pay Bonchon liquidated damages in accordance with the formula set forth above.

32.  Indemnification:  varies

• You indemnify Bonchon from certain losses and expenses.

33.  Standard Violation Fee:  $5,000

• Due Date:  Upon demand, if incurred.

• If you breach an obligation under the Franchise Agreement or Bonchon’s System standards, Bonchon reserves the right to charge you a fee equal to $5,000 per day, commencing on the date of the breach and continuing until the breach is fully cured.

• Bonchon’s imposition of this fee is in addition to its (and not instead of) all other rights and remedies that it may exercise under the Franchise Agreement and/or available to it under applicable law (including termination).

34.  Attorneys’ and Experts’ Fees, Court Costs:  the amount of these fees and costs are unknown and may vary depending upon factors such as the attorneys and experts selected and the court costs