Is the initial franchise fee for a Buona franchise refundable?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
tial term of this Agreement but before the execution of a renewal Franchise Agreement as required by Section 2.2, then the temporary continuation of the Franchised Business will be on a month-to-month basis, and will be terminable at Franchisor's option by giving Franchisee written notice of termination at least thirty (30) days before the termination is effective. If the laws of the jurisdiction in which the Franchisee or the Franchised Business are located require a longer notice period, the thirty-day period will be deemed modified to be the shortest notice period required by the laws of such jurisdiction.
III. FEES
- 3.1 Initial Franchise Fee In consideration of the franchise granted to Franchisee herein, Franchisee shall pay to Franchisor an Initial Franchise Fee in the amount of Forty Thousand Dollars ($40,000.00) payable in one lump sum upon execution of this Agreement by Franchisee. Except as otherwise specifically provided herein at Section 8,2, the initial franchise fee is non-refundable. The Initial Franchise Fee is deemed fully earned upon payment, in consideration of expenses incurred by Franchisor in granting the franchise and for Franchisor's lost or deferred opportunity to grant a franchise to others.
- 3.2 Royalty. Franchisee shall pay to Franchisor a recurring, non-refundable royalty in the amount of four percent (4%) of Gross Sales (as defined herein) during the Term, payable weekly (or on such other basis as may be set forth in the Manual or otherwise agreed to in writing by Franchisor) calculated on Gross Sales of the preceding week.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the initial franchise fee of $40,000 is generally non-refundable. This fee is paid in a lump sum upon the execution of the Franchise Agreement. Buona considers this fee fully earned upon payment due to the expenses it incurs in granting the franchise and the lost opportunity to grant a franchise to someone else. This is a common practice in franchising, as the initial fee compensates the franchisor for the initial costs of setting up a new franchisee.
However, there is a specific circumstance under which a portion of the initial franchise fee may be refunded. If Buona terminates the Franchise Agreement because the Operating Owner does not successfully complete the initial training program, Buona will refund 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.
In summary, while the initial franchise fee is typically non-refundable, a franchisee may receive a partial refund (10%) if the agreement is terminated due to the Operating Owner's failure to complete the initial training program, provided they meet the conditions set by Buona.