How does the indemnification fee in Item 6 relate to the estimated initial investment for a Buona franchise as described in Item 7?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
as described above.
ITEM 6 OTHER FEES
Franchise Agreement
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Indemnification | Actual costs incurred by us. | As incurred | You have to reimburse us if we are held liable for claims arising from your operation of the development business or incur costs in defending them. |
| Costs and Attorney’s Fees | Actual costs incurred by us. | As incurred | You must reimburse us for costs and attorneys’ fees for enforcement of covenants, for obtaining specific performance of injunctive relief, and if we are successful in an action to enforce the Area Development Agreement. |
| Type of Fee | Amount | Due Date | Remarks |
| Technology Fee | As determined by us based on technology costs for the franchise system. Currently $100 per week | Payable each week. | We will charge this fee via an authorized ACH payment along with royalties. We will give you 60 days prior notice before changing the amount of the fee. |
| Renewal Fee | $7,500 | 30 days prior to the signing of the renewal franchise agreement | |
| Interest on Late Payments | Highest rate of interest permitted by law not to exceed 1.5% per month | As incurred | This interest rate applies to any money you owe us or our affiliate that is more than 7 days overdue and will accrue until the amounts are paid in full. Interest is in addition to service and NSF charges. |
| Service Charges and Non-Sufficient Funds Fee | Currently $250 | Upon demand | Payable if an ACH transaction is not honored. |
| Customer Satisfaction Reimbursement | Actual costs incurred by us. | As incurred | We may, in our sole discretion, remedy any issues with customers of your Buona Business, which may include refunding to the customer any amounts the customer paid to you. You are required to reimburse us for any such refunds we issue. |
| Initial Training | No charge for the first attendee to the ownership training (the operating owner having at least a 10% interest); No charge for the first 5 managerial owners/employees to the initial manager training. Additional parties pay our then current tuition fee which is currently $1,500 per week. | As incurred | The cost of Initial Training (instruction and required materials) is borne by us. All other expenses, including travel, meals and lodging and your employee wages, are your responsibility. Additional owners and managers may attend the initial training program as space in available and for the current tuition fee. |
| Type of Fee | Amount | Due Date | Remarks |
| ----------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| On-Site Training Fee | The then-current daily rate for each trainer on-site to provide the training, plus all travel and living expenses incurred by our representative(s). Currently daily rate per training is $250. | $20,000 deposit is due upon the execution of the Franchise Fee. The balance is due upon completion of on-site training. | One or more representatives will spend approximately 30 days at the premises of the Franchised Business prior to and immediately following the date of the opening of the Franchised Business to provide on-site training as we deem necessary for the opening and initial period of operation of the Franchised Business. The number of trainers may vary during the on site training and the length of the training may vary. |
| Supplemental Training | Tuition fee; amount not yet determined since we have not yet conducted such training. | As incurred. | We may from time to time provide, and may require, that you, your owners and/or managers attend and successfully complete supplemental training, seminars, regional franchise meetings or webinars to be conducted at times and locations designated by us. We may require attendance at such training, seminars and meetings for up to 5 days each calendar year. We may charge a tuition fee for any such training, seminars, meetings or webinars and you will be responsible for all expenses incurred by you and your owners and/or managers in attending these programs. |
| Additional Training Assistance | Then-current training fees for such Additional Training (currently $300 per day per trainer), plus any travel and living expenses incurred by our representative if travel to your location is necessary. | As incurred | Paid to us if you request additional training above our normal training offerings and we provide such training in our discretion, or if we require additional training in the ev |
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the indemnification fee is an obligation for the franchisee to cover costs incurred by Buona due to claims arising from the franchisee's business operations. This fee is detailed in Item 6 as "actual costs incurred by us." Unlike the fees listed in Item 7, such as the initial franchise fee of $40,000 or the on-site training deposit of $20,000, the indemnification fee is not a fixed amount included in the initial investment estimate. Instead, it is a contingent liability that may arise during the operation of the franchise.
Item 7 provides an estimated range for the initial investment required to establish a Buona franchise. However, it explicitly states that these are estimates and the franchisee's actual costs may vary. The indemnification fee is separate from these estimated costs and is dependent on specific circumstances, such as legal claims or liabilities resulting from the franchisee's actions. Therefore, while Item 7 outlines the expected initial expenses, it does not account for potential, unforeseen costs like indemnification.
Prospective Buona franchisees should recognize that the indemnification fee can significantly impact their overall financial obligations. While the initial investment covers the costs of setting up the franchise, the indemnification fee represents a potential ongoing expense that could arise due to operational issues or legal challenges. It is crucial for franchisees to operate their businesses responsibly and in compliance with all applicable laws and regulations to minimize the risk of incurring indemnification costs. Understanding the potential for these types of unforeseen expenses is an important aspect of assessing the overall financial viability of a Buona franchise.