Is the Development Fee for a Buona franchise refundable?
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 generally non-refundable. Specifically, upon signing the Development Agreement, the franchisee must pay a Development Fee of $16,000 multiplied by the number of additional Buona restaurants to be developed beyond the first one. This fee serves as consideration for the Development Agreement.
Buona considers the Development Fee fully earned upon the execution of the Development Agreement. The FDD explicitly states that the Development Fee is non-refundable, regardless of any conflicting terms in the Franchise Agreement. However, there is a potential credit: $16,000 of the Development Fee will be credited towards the Initial Franchise Fee for each additional Buona Restaurant, provided that the Franchise Agreement is executed according to the Development Agreement.
This non-refundable policy means that if a prospective Buona franchisee decides not to proceed with developing the additional restaurants outlined in the Development Agreement, they will not receive a refund of the Development Fee. The credit towards the Initial Franchise Fee offers some value, but only if the franchisee follows through with the development schedule. This is a standard practice in franchising, as the franchisor incurs costs and sets aside territory based on the development agreement.