How often are royalty payments for a Buona franchise required to be paid?
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.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, franchisees are generally required to pay royalties on a weekly basis. Specifically, the royalty payments are calculated on the gross sales of the preceding week. However, the FDD notes that the payment schedule could vary if specified in the manuals or otherwise agreed to in writing with Buona.
This weekly payment schedule is fairly common in the franchise industry, as it allows franchisors to maintain a consistent cash flow and closely monitor the performance of their franchisees. For a prospective Buona franchisee, this means that they will need to ensure they have systems in place to accurately track gross sales on a weekly basis and remit royalty payments promptly to avoid potential penalties or default.
In addition to royalties, Buona franchisees must also contribute to a marketing fund. These contributions are also due weekly, aligning with the royalty payment schedule. This coordinated payment structure simplifies the administrative tasks for franchisees, as both royalties and marketing fund contributions can be handled simultaneously. Franchisees should be aware of the potential for changes to the payment schedule, as Buona retains the right to modify the payment basis as detailed in the manuals or through written agreement.