In large saucepan, sauté onion in butter with bouillon, stirring to dissolve; add flour. Whisk together until smooth.
Cook stirring constantly, until butter and flour mixture bubbles and looks fluffy.
Slowly whisk milk in; cook over medium heat until mixture thickens.
Add cheeses gradually and stir until melted. Keep warm while serving. A fondue pot is best.
Things to dip in fondue include: French bread (cut or torn into bite-size chunks, day old bread is best), apple slices, carrot sticks, celery sticks, broccoli flowerettes, chunks of fried hot dog, cooked ham, Vienna sausage, etc. Use your imagination.