In California, what condition imposed by the Commissioner affects Buona's ability to collect initial franchise fees?

According to Buona's 2025 Franchise Disclosure Document, the California Commissioner has placed a condition on the collection of initial franchise fees. Buona must defer collecting initial fees from California franchisees until all pre-opening obligations are fulfilled and the franchise is open for business. This means that Buona cannot collect the standard initial franchise fee from franchisees in California until the franchisee's location is fully operational. For franchisees in California who sign a development agreement with Buona, the payment of development and initial fees for each specific unit is also deferred until that unit is open.

This condition has significant implications for prospective Buona franchisees in California. It reduces the upfront financial burden, as franchisees do not have to pay the initial franchise fee, which can be Forty Thousand Dollars ($40,000.00), until their business is ready to open. This arrangement could be seen as a benefit, as it aligns the franchisor's interests more closely with the franchisee's success, ensuring Buona is invested in helping the franchisee get to the opening stage.

However, it also reflects the Commissioner's assessment that Buona may not be adequately capitalized or may rely on franchise fees to fund operations. This could raise concerns about Buona's financial stability and its ability to support franchisees adequately. Prospective franchisees should carefully evaluate Buona's financial statements and business plan to assess the potential risks associated with this condition. It is also important to note that this condition only applies to franchisees operating in California, as the California Franchise Investment Law and the California Franchise Relations Act will apply regardless of any conflicting language in the franchise agreement.