Which sections of the Buona Franchise Agreement address the payment of fees?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
anchised 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 Chicago's Original Italian Beef Franchising, LLC an initial franchise fee in the amount of Forty Thousand Dollars ($40,000.00) and shall pay to Five Flavors Franchising, LLC an initial franchise fee in the amount of Twenty Thousand Dollars ($20,000.00) (collectively, the "Initial Franchise Fee") 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 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. Franchisor has right to discontinue or reestablish the Marketing Fund upon sixty (60) days' advance notice to you. In the event
Franchisor discontinues the Marketing Fund, Franchisor will distribute all unspent amounts existing in the Marketing Fund on the date of discontinuance to franchisees in proportion to their respective contributions for the most recent six (6) months. This Marketing Fund contribution is due weekly (or on such other basis as may be set forth in the Manuals or otherwise agreed to in writing by Franchisor) along with the royalty fee for the Gross Sales for the preceding week.
Source: Item 9 — FRANCHISEE'S OBLIGATIONS (FDD pages 34–37)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, several sections within the Franchise Agreement outline the various fees a franchisee is required to pay. Section 3.1 covers the initial franchise fee, specifying that the franchisee must pay $40,000 to Chicago's Original Italian Beef Franchising, LLC and $20,000 to Five Flavors Franchising, LLC, totaling $60,000. This fee is payable in a lump sum upon the execution of the agreement and is generally non-refundable, being deemed earned upon payment due to expenses incurred by Buona in granting the franchise.
Section 3.2 details the royalty fees. Franchisees must pay a recurring royalty of 4% of Gross Sales from Buona products to Chicago's Original Italian Beef Franchising LLC and 6% of Gross Sales from The Original Rainbow Cone products to Five Flavors Franchising, LLC. These royalties are non-refundable, paid throughout the term of the agreement, and are typically payable weekly, though the payment basis can be modified in the manuals or by written agreement. Section 3.3 discusses the Marketing Fund contribution, where franchisees contribute up to 2.5% of Gross Sales from Buona products and up to 3% of Gross Sales from The Original Rainbow Cone products to the Marketing Fund. Buona must provide 60 days' notice before any changes to this contribution.
Section 3.4 outlines the Technology Fee, stating that franchisees must pay a technology fee in an amount determined by Buona. Item 5 further specifies that a franchisee must pay a non-refundable $5,000 deposit upon the execution of the Franchise Agreement for design and architectural services. Item 6 provides a table of other fees, including an ongoing Technology Fee of $100 per week, a Renewal Fee of $7,500, interest on late payments, service charges for non-sufficient funds, and costs associated with indemnification, attorney's fees, customer satisfaction reimbursement, and various training programs. These sections collectively define the financial obligations of a Buona franchisee under the Franchise Agreement.