Does acceptance of royalty fees from a third party constitute approval of transfer by Buona?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Acceptance by Franchisor of any royalty fee, marketing fund contributions or any other amount accruing hereunder from any third party, including but not limited to any proposed transferee, shall not constitute Franchisor's approval of such party as a transferee or the transfer of this Agreement to such party.
Any purported assignment or transfer, by operation of law or otherwise, not having the written consent of Franchisor, shall be null and void, and shall constitute a material breach of this Agreement, for which Franchisor may then terminate without opportunity to cure pursuant to Section 16.2(f) of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the acceptance of royalty fees, marketing fund contributions, or any other amount from a third party does not constitute approval of a transfer. This means that even if Buona accepts payments from a potential buyer of your franchise, it does not automatically approve the sale or transfer of the franchise to that party.
Buona requires franchisees to obtain prior written consent before transferring any interest in the franchise agreement, the franchise itself, or a substantial portion of the franchise's assets. This requirement ensures that Buona maintains control over who becomes a franchisee and that any new franchisee meets their standards. Any transfer without Buona's written consent is considered a breach of the franchise agreement, potentially leading to termination.
This provision protects Buona by ensuring they have the right to vet and approve any new franchisee. For a prospective franchisee, this means they cannot assume a transfer is approved simply because Buona has accepted payments from the potential transferee. It is crucial to obtain explicit written consent from Buona to ensure the transfer is valid and to avoid breaching the franchise agreement.