When is the Development Fee for a Buona franchise paid?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
-------------|--------------------| | FRANCHISOR INITIALS | DEVELOPER INITIALS |
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, the Development Fee is due upon the execution of the Development Agreement. Specifically, the franchisee must pay $16,000 times the number of additional Buona restaurants to be developed after the first one. This fee compensates Buona for granting the development rights and is considered fully earned and non-refundable once the agreement is executed.
However, the FDD also states that $16,000 of the Development Fee will be credited against the Initial Franchise Fee for each additional Franchise Agreement for a Buona Restaurant. This credit is applied when each subsequent Franchise Agreement is executed, provided it aligns with the Development Agreement's terms.
In summary, while the entire Development Fee is payable upfront upon signing the Development Agreement, a portion of it ($16,000 per restaurant) effectively functions as a pre-payment towards the Initial Franchise Fees of the subsequent Buona restaurants developed under the agreement. This arrangement is fairly common in area development franchise agreements, as it incentivizes developers to proceed with opening multiple locations.