Is the royalty fee for a Buona franchise calculated before or after deducting any expenses?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
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. Royalty fees shall be paid in the manner set forth in Section 3.5 of this Agreement or as otherwise provided for in the Manual.
- 3.3 Marketing Fund Contribution.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the royalty fee is related to the Gross Sales of the franchised business. The document also states that the franchisee shall contribute to the Marketing Fund an amount the Franchisor designates up to 2.5% of the Gross Sales.
This means that Buona calculates both the royalty fee and the marketing fund contribution based on the total revenue generated by the franchise before any deductions for expenses. Gross Sales is the top-line revenue figure, so franchisees need to be aware that these fees are calculated on the unadjusted income.
Prospective franchisees should carefully consider the implications of having royalty and marketing fees calculated on gross sales, as this can impact their profitability. It is important to factor these costs into their financial projections and business plan.