In California, what is the specific condition imposed on Buona regarding the collection of initial fees from franchisees?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 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.
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.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the Commissioner in California has imposed a fee deferral condition due to the franchisor not demonstrating adequate capitalization or relying on franchise fees to fund operations. This means that Buona must defer the collection of all 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 deferred until that specific unit is open. This condition is specific to California franchisees and aims to protect them, given the state's regulatory oversight on franchise investments.
This deferral of fees until the business is operational is a significant benefit for franchisees in California, as it reduces their upfront financial burden and aligns the franchisor's interests more closely with the franchisee's success. It also provides a level of security, ensuring that franchisees are not paying fees until they are actually able to start generating revenue. Prospective franchisees should confirm with Buona that they understand all pre-opening obligations.