How is the Development Fee credited against the Initial Franchise Fee for a Buona Restaurant?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
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Development Schedule. If you are not in compliance with the Development Schedule at the time of signing any additional franchise agreement, you will pay the then-current initial franchise fee being charged to new franchisees if it is greater than Thirty-Two Thousand Dollars ($32,000.00).
2.2 Upon the execution of this Development Agreement, you shall pay a fee ("Development Fee") in the amount of Sixteen Thousand Dollars ($16,000.00) times the number of additional Buona Restaurants to be developed after the one for which Developer is signing a Franchise Agreement contemporaneously with this Development Agreement. The Development Fee is consideration for this Development Agreement, is fully earned by Franchisor upon execution of this Development Ag
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if a developer signs a Development Agreement, they must pay a Development Fee. This fee is calculated by multiplying $16,000 by the number of additional Buona Restaurants the developer plans to open, beyond the first restaurant. This upfront Development Fee compensates Buona for granting the developer the rights to expand in a specific area.
While the Development Fee is non-refundable, Buona credits $16,000 of the Development Fee towards the Initial Franchise Fee for each additional Buona Restaurant, as long as the franchisee adheres to the Development Agreement. This means that for each subsequent franchise agreement signed under the Development Agreement, the franchisee will receive a reduction of $16,000 on the initial franchise fee typically due for a new Buona restaurant.
It's important to note that this credit is contingent upon the developer's compliance with the Development Schedule. If the developer fails to meet the milestones outlined in the Development Schedule at the time of signing any additional franchise agreement, they will be required to pay the full initial franchise fee then being charged to new franchisees, which could be higher than $32,000. Therefore, maintaining compliance with the Development Schedule is crucial to realize the Development Fee credit.