In California, what is the consequence if Buona fails to complete all pre-opening obligations before collecting initial fees?

According to Buona's 2025 Franchise Disclosure Document, the Commissioner in California has imposed a fee deferral condition due to Buona not demonstrating adequate capitalization and/or relying on franchise fees to fund operations. This means that Buona must defer collecting any initial fees from California franchisees until all pre-opening obligations are completed and the franchisee is open for business.

For California franchisees who sign a development agreement with Buona, the payment of development and initial fees attributable to a specific unit in the development schedule is also deferred until that specific unit is open. This condition is designed to protect franchisees in California by ensuring that Buona fulfills its pre-opening responsibilities before receiving initial fees.

This arrangement provides a level of security for franchisees in California, aligning Buona's interests with the franchisee's success. It ensures that Buona is incentivized to provide the necessary support and fulfill its obligations to get the franchisee's location up and running before receiving payment. This is a more protective stance than is typical in the franchise industry, where initial fees are often paid upfront and non-refundable regardless of the franchisor's performance.