What actual costs are covered under the Indemnification fee for a Buona franchise?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
as described above.
ITEM 6 OTHER FEES
Franchise Agreement
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Indemnification | Actual costs incurred by us. | As incurred | You have to reimburse us if we are held liable for claims arising from your operation of the development business or incur costs in defending them. |
| Costs and Attorney’s Fees | Actual costs incurred by us. | As incurred | You must reimburse us for costs and attorneys’ fees for enforcement of covenants, for obtaining specific performance of injunctive relief, and if we are successful in an action to enforce the Area Development Agreement. |
| Type of Fee | Amount | Due Date | Remarks |
| Technology Fee | As determined by us based on technology costs for the franchise system. Currently $100 per week | Payable each week. | We will charge this fee via an authorized ACH payment along with royalties. We will give you 60 days prior notice before changing the amount of the fee. |
| Renewal Fee | $7,500 | 30 days prior to the signing of the renewal franchise agreement | |
| Interest on Late Payments | Highest rate of interest permitted by law not to exceed 1.5% per month | As incurred | This interest rate applies to any money you owe us or our affiliate that is more than 7 days overdue and will accrue until the amounts are paid in full. |
Source: Item 6 — OTHER FEES (FDD pages 16–23)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the indemnification fee covers the actual costs Buona incurs due to specific situations related to the franchisee's business operations. The franchisee must reimburse Buona if the company is held liable for claims arising from the franchisee's operation of the business or if Buona incurs costs in defending against such claims.
Specifically, the franchisee is responsible for covering losses and expenses Buona incurs in connection with any action, suit, proceeding, claim, demand, investigation, or formal or informal inquiry, regardless of whether it results in a judgment. This also includes any settlement costs related to these issues, provided that these actions arise out of or are based upon the items listed in the "Indemnification" section of the Franchise Agreement.
In practical terms, this means a Buona franchisee could be responsible for significant costs if their business operations lead to legal claims or investigations against Buona. It is important for a prospective franchisee to carefully review the "Indemnification" section of the Franchise Agreement to fully understand the scope of their responsibilities and potential financial exposure. Understanding what actions could trigger this indemnification and ensuring proper business practices and insurance coverage are crucial for mitigating this risk.