What was the total amount of revenue Buona received from initial license fees in 2023?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Deferred Revenue, less Current Portion | | | | TOTAL LONG-TERM LIABILITIES | 211,917 | 58,917 | | TOTAL LIABILITIES | 381,469 | 104,941 | | MEMBERS' EQUITY (DEFICIT) Members' Equity (Deficit) Members' Contributions | (122,239) - | (19,123) 25,000 | | TOTAL MEMBERS' EQUITY (DEFICIT) | (122,239) | 5,877 | | TOTAL LIABILITIES AND MEMBERS' EQUITY (DEFICIT) | $ 259,230 | $ 110,818 |
FOR THE FISCAL YEARS ENDED STATEMENTS OF OPERATIONS CHICAGO'S ORIGINAL ITALIAN BEEF FRANCHISING LLC DECEMBER 31, 2023 AND JANUARY 1, 2023
| 2023 | 2022 | |
|---|---|---|
| REV |
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the company received $6,500 in initial license fees in 2023. This revenue represents the income Buona earned from granting new franchises during that year. This fee is paid upfront by new franchisees to secure the rights to operate a Buona restaurant.
It is important to note that this figure reflects only the initial license fees recognized as revenue during 2023. Buona also collects fees for Area Development Agreements (ADAs), which grant franchisees the right to open multiple locations within a specific area. These ADA fees are initially considered deferred revenue and are recognized as income either when the franchisee signs individual franchise agreements for new locations or when the development schedule deadline passes.
The initial franchise fee is typically non-refundable and is recognized as earned upon payment, covering Buona's expenses related to granting the franchise and the opportunity cost of not granting it to someone else. This fee is distinct from ongoing royalties, which are calculated as a percentage of the franchisee's gross sales. In Buona's case, the royalty fee is 4% of gross sales for Buona products and services.