How often are royalty payments due for a Buona franchise?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
tial 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 recurring, non-refundable royalties as follows: (i) to Chicago's Original Italian Beef Franchising LLC, a royalty in the amount of four percent (4%) of Gross Sales (as defined herein) derived from the sale of Buona products and services; and (ii) to Five Flavors Franchising, LLC, a royalty in the amount of six percent (6%) of Gross Sales derived from the sale of The Original Rainbow Cone products and services. The royalties shall be paid throughout the Term, and are payable weekly (or on such other basis as may be set forth in the Manuals or otherwise agreed to in writing by Franchisor) calculated on Gross Sales of the preceding week. Royalty fees shall be paid in the manner set forth in Section 3.5 of this Agreement or as otherwise provided for in the Manuals.
- 3.3 Marketing Fund Contribution. Recognizing the value of advertising and marketing to the goodwill and public image of the Franchised Businesses, each Franchisor will establish, maintain and administer an advertising, marketing and promotional fund (the "Marketing Fund") for such advertising, marketing and promotions as Franchisor may deem necessary or appropriate in its sole discretion. Franchisee shall contribute to each of the Marketing Funds an amount Franchisor designates up to a total of two and one-half percent (2.5%) of the Gross Sales (as defined below) of the Franchised Business arising from the sale of Buona products and services and up to a total of three percent (3%) of the Gross Sales of the Franchised Business arising from the sale of The Original Rainbow Cone products and services. Franchisor shall determine whether Franchisee will make one payment to Franchisor that will be distributed to each Marketing Fund based on the Gross Sales of the respective Brands or whether Franchisee shall make separate payments to each Marketing Fund. Franchisor will give Franchisee sixty (60) days' notice prior to implementing any increase or decrease in the Marketing Fund contribution.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, franchisees are required to pay royalties on a recurring basis. Specifically, the royalty payments are due weekly, calculated based on the Gross Sales from the preceding week. However, the FDD notes that the payment schedule could be on another basis if outlined in the Manuals or otherwise agreed to in writing with Buona.
The standard royalty for Buona products and services is 4% of Gross Sales, payable to Chicago's Original Italian Beef Franchising LLC. If the franchise also sells The Original Rainbow Cone products and services, an additional royalty of 6% of Gross Sales is payable to Five Flavors Franchising, LLC. These royalties are non-refundable and must be paid throughout the entire term of the franchise agreement.
In addition to royalties, Buona franchisees must also contribute to a Marketing Fund. This contribution is also due weekly, along with the royalty fee. The Marketing Fund contribution can be up to 2.5% of Gross Sales for Buona products and services and up to 3% of Gross Sales for The Original Rainbow Cone products and services. The franchisor determines whether the franchisee makes one payment distributed to each fund or separate payments to each fund.
It is important for prospective franchisees to clarify the exact payment schedule and methods with Buona, as the specifics may vary based on what is outlined in the franchise agreement, the manuals, or any other written agreement. Understanding these payment obligations is crucial for managing the financial aspects of the franchise.