How might the characteristics of the 19 units in Item 19 differ from those of franchised Buona outlets?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
The following should be considered in reviewing and determining whether to rely on these figures.
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- Characteristics of the 19 units in this Item 19 may differ materially from those of any franchised outlets being offered under this Franchise Disclosure Document include:
- The 19 affiliate-owned restaurants included in this Item 19 are located in a market where there has been recognition of the Buona name and brand for 40 years. The Original Rainbow Cone name and brand was established in the market over 90 years ago. Franchisees establishing a unit in a new market without brand recognition may not perform as well, especially in the initial phase of the new business.
- Food and product costs for all existing affiliate-owned restaurants have been negotiated by our affiliates with manufacturers and distributors on a consolidated basis and have the benefit of volume costs for units all located within one region. New franchisees in new markets may not have the volume to negotiate favorable prices with manufacturers and distributors serving the franchisee's region which would result in higher costs for these products.
- The affiliate-owned restaurants do not pay royalties or other ongoing fees to that you will pay to us under the Franchise Agreement. However, as noted in the tables above, we have imputed the fees that a franchisee would be required to pay.
Affiliate-owned restaurants sell pizza, but the franchised restaurants will not sell pizza. The table below shows what percentage of total sales of the affiliate-owned units was derived from the sale of pizza products for each of the affiliate-owned restaurants. It is anticipated that customers who might have ordered pizza at an affiliate-owned restaurant will order other menu items at the Franchised Restaurant.
Source: Item 19 — FINANCIAL PERFORMANCE REPRESENTATIONS (FDD pages 60–75)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the 19 affiliate-owned restaurants included in Item 19 may differ significantly from franchised outlets. These differences are important for prospective franchisees to consider when evaluating the financial performance representations. The affiliate-owned restaurants are located in a market where the Buona name has been recognized for 40 years, and the Original Rainbow Cone brand for over 90 years. New franchisees in markets without this established brand recognition may not perform as well, especially initially. This suggests that brand recognition plays a crucial role in the success of Buona restaurants, and new franchisees will need to invest in marketing and awareness campaigns to build a customer base.
Another key difference lies in food and product costs. The affiliate-owned restaurants benefit from consolidated purchasing power, negotiating favorable prices with manufacturers and distributors due to their volume and regional concentration. New franchisees in different markets may not have the same purchasing power, potentially leading to higher food and product costs. This could impact their profit margins and overall financial performance. Therefore, franchisees should carefully analyze their potential supply chain costs and explore opportunities for group purchasing or negotiating favorable terms with suppliers.
Furthermore, the affiliate-owned restaurants do not pay royalties or other ongoing fees that franchisees will be required to pay under the Franchise Agreement. While the financial performance data imputes these fees, it's essential to recognize that these are real costs that will affect a franchisee's bottom line. Additionally, affiliate-owned restaurants sell pizza, while franchised restaurants will not. This change in menu offerings could impact customer preferences and sales mix, requiring franchisees to adapt their marketing and operational strategies. Prospective franchisees should consider these factors and conduct their own independent investigation into the potential revenue, costs, and profit potential of a Buona franchise.