What condition has the Commissioner imposed on Buona regarding the collection of initial fees from California 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.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the California Commissioner has imposed a condition regarding the collection of initial franchise fees from franchisees in California. This condition stems from a determination that Buona has not demonstrated adequate capitalization or that it relies on franchise fees to fund its operations.
Specifically, Buona must defer collecting all initial fees from California franchisees until it has completed all pre-opening obligations and the franchisee is open for business. This means that a new Buona franchisee in California will not have to pay the initial franchise fee upfront. Instead, they can delay payment until their restaurant is ready to open.
For California franchisees who sign a development agreement with Buona, the payment of development and initial fees attributable to a specific unit in their development schedule is deferred until that specific unit is open. This deferral of fees provides a significant benefit to California franchisees, reducing their initial financial burden and aligning the payment of fees with the commencement of operations and revenue generation.