When is the initial franchise fee for a Buona franchise considered fully earned by the franchisor?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
If, during the initial training program, Franchisor determines, in its sole discretion, that Franchisee's
Operating Owner did not successfully complete the initial training, Franchisor has the right to require the Operating Owner to attend and successfully complete additional training or to require a different owner to be designated Operating Owner to attend and successfully complete training, and/or Franchisor has the right to terminate this Agreement, effective upon delivery of written notice thereof to Franchisee. If Franchisee is terminated by Franchisor for failure to successfully complete the initial owner training, Franchisor agrees to refund ten percent (10%) of the initial franchise fee paid upon Franchisee's execution and delivery to Franchisor of a termination agreement and general release of all claims in a form satisfactory to Franchisor.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
Based on the 2025 Buona Franchise Disclosure Document, the initial franchise fee is generally non-refundable, but there is a specific circumstance where a portion may be refunded. If Buona terminates the franchise agreement because the Operating Owner does not successfully complete the initial training program, Buona will refund ten percent (10%) of the initial franchise fee. This refund is contingent upon the franchisee executing and delivering a termination agreement and a general release of all claims in a form satisfactory to Buona.
This condition provides a limited exception to the typical non-refundable nature of franchise fees. It suggests that Buona acknowledges a degree of responsibility for ensuring the franchisee's operating owner is adequately trained. However, the refund is only 10% of the initial fee, meaning Buona retains the majority of the fee even if they terminate the agreement due to training issues.
Prospective Buona franchisees should carefully consider the implications of this policy. While the 10% refund offers some protection, it is crucial to ensure that the designated Operating Owner is fully committed to and capable of completing the training program. Franchisees should also clarify with Buona what constitutes "successful completion" of the training and what specific metrics are used to evaluate the Operating Owner's performance. This will help avoid potential disputes over the refund eligibility.