For Buona, what agreement must be executed concurrently with the Development Agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
activities not expressly prohibited by this Agreement.
- 1.4 This Agreement is not a Franchise Agreement, and you shall have no right to use in any manner the System or the Marks by virtue of entering into this Agreement.
- 1.5 Developer shall have no right under this Agreement to license others to operate a business or use the System or the Marks.
2. FEES
2.1 Concurrent with the execution of this Agreement, you must execute a Franchise Agreement for the first Buona Restaurant to be developed and pay the initial franchise fees of Forty Thousand Dollars ($40,000.00) due under said Franchise Agreement. The initial franchise fee for the remaining Franchise Agreements shall be Thirty-Two Thousand Dollars ($32,000.00) on the condition that, at the time you sign any additional Franchise Agreement under this Agreement, you are currently in compliance with the
| ADA 2025 | - 2 - |
|---|---|
| FRANCHISOR INITIALS | DEVELOPER INITIALS |
Development Schedule. If you are not in compliance with the Development Schedule at the time of signing any additional franchise agreement, you will pay the then-current initial franchise fee being charged to new franchisees if it is greater than Thirty-Two Thousand Dollars ($32,000.00).
2.2 Upon the execution of this Development Agreement, you shall pay a fee ("Development Fee") in the amount of Sixteen Thousand Dollars ($16,000.00) times the number of additional Buona Restaurants to be developed after the one for which Developer is signing a Franchise Agreement contemporaneously with this Development Agreement.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, when signing the Development Agreement, the franchisee must also execute a Franchise Agreement for the first Buona restaurant to be developed. Additionally, the Owners of the Developer must execute the Guaranty and Assumption of Obligations, which is included as Exhibit C to the Area Development Agreement.
Specifically, the franchisee must pay the initial franchise fee of $40,000 due under the Franchise Agreement for the first restaurant. The initial franchise fee for subsequent franchise agreements will be $32,000, provided the franchisee is in compliance with the Development Schedule at the time of signing. If the franchisee is not in compliance with the Development Schedule, they will pay the then-current initial franchise fee being charged to new franchisees if it is greater than $32,000.
Furthermore, the franchisee will pay a Development Fee of $16,000 times the number of additional Buona Restaurants to be developed after the first one. This fee is consideration for the Development Agreement and is fully earned by Buona upon execution of the agreement and is non-refundable. However, $16,000 of the Development Fee will be credited against the Initial Franchise Fee for each additional Franchise Agreement executed pursuant to the Development Agreement.
These requirements ensure that the developer is committed to opening the first location and that Buona receives compensation for granting the development rights. The personal guarantee from the owners adds another layer of security for Buona, holding them accountable for the obligations under the Development Agreement.