In California, is Buona required to defer the collection of all initial fees from franchisees?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
The Commissioner has imposed a fee deferral condition, which requires that we defer the collection of all initial fees from California franchisees until we have completed all of our pre-opening obligations and you are open for business.
For California franchisees who sign a development agreement, the payment of the development and initial fees attributable to a specific unit in your development schedule is deferred until that unit is open.
- The Department has determined that we, the franchisor, have not demonstrated we are adequately capitalized and/or that we must rely on franchise fees to fund our operations.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the Commissioner has imposed a fee deferral condition for California franchisees. This means Buona must defer collecting all initial fees from franchisees in California until Buona has completed all pre-opening obligations 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 deferred until that specific unit is open. This condition is due to the Department determining that Buona has not demonstrated adequate capitalization and/or must rely on franchise fees to fund its operations.
This deferral of fees is a significant benefit for prospective Buona franchisees in California, as it reduces the upfront financial burden and aligns the franchisor's interests with the franchisee's success in opening and operating the business. It also mitigates some of the risk for the franchisee, as they are not paying the full initial fees until the business is ready to open.