According to the Buona agreement, what constitutes an 'Event of Default'?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.1. Definitions. The term "Event of Default" means the occurrence and continuation of any one (1) or more of the following events:
- (a) any failure of Debtor promptly and faithfully to pay, observe and perform, when due, any of the Obligations;
- (b) if Debtor becomes insolvent, commits an act of bankruptcy, files a voluntary petition in bankruptcy, or an involuntary petition in bankruptcy is filed, or a permanent or temporary receiver or trustee for the Buona Restaurant, or all or substantially all of the Debtor's property, is appointed by any court and such appointment is not actively opposed through legal action, or Debtor makes an assignment or arrangement for the benefit of creditors, or calls a meeting of creditors, or Debtor makes a written statement to the effect that he or it is unable to pay his or its debts as they become due, or a levy of execution is made upon Debtor, or an attachment or lien outstanding with respect to the Buona Restaurant for thirty (30) days, unless the attachment or lien is being duly contested in good faith by Debtor and Secured Party is advised in writing
- (c) if Debtor loses possession or the right of possession of all or a significant part of the Buona Restaurant through condemnation or casualty and the Buona Restaurant is not relocated or reopened as required by the Franchise Agreement;
- (d) if Debtor abandons, surrenders or transfers control of the operation of the Franchised Business without Secured Party's prior written consent; or
- (e) if Debtor is a corporation, limited liability company, partnership, joint venture or other legal entity, any action is taken which purports to merge, consolidate, dissolve or liquidate Debtor without the prior written consent of Secured Party.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, an 'Event of Default' is defined as the occurrence and continuation of any one or more specific events. These events include failure to promptly pay, observe, and perform any of the obligations when due. This means a franchisee's failure to meet financial obligations or other contractual duties can trigger a default.
Additional events that constitute default include insolvency, committing an act of bankruptcy, filing a voluntary petition in bankruptcy, or having an involuntary petition in bankruptcy filed against the franchisee. The appointment of a receiver or trustee for the Buona Restaurant, or all or substantially all of the Debtor's property, by any court also constitutes an event of default, especially if not actively opposed through legal action. Furthermore, making an assignment or arrangement for the benefit of creditors, calling a meeting of creditors, or making a written statement indicating an inability to pay debts as they become due are also considered events of default. A levy of execution made upon the Debtor, or an attachment or lien outstanding with respect to the Buona Restaurant for thirty (30) days, also constitutes an event of default, unless the attachment or lien is being duly contested in good faith by the Debtor and the Secured Party is advised in writing.
Other events of default include losing possession or the right of possession of all or a significant part of the Buona Restaurant through condemnation or casualty, especially if the restaurant is not relocated or reopened as required by the Franchise Agreement. Moreover, if the Debtor abandons, surrenders, or transfers control of the operation of the Franchised Business without the Secured Party's prior written consent, it constitutes an event of default. If the Debtor is a corporation, limited liability company, partnership, joint venture, or other legal entity, any action taken to merge, consolidate, dissolve, or liquidate the Debtor without the prior written consent of the Secured Party also constitutes an event of default. These stipulations are designed to protect Buona's interests and ensure franchisees adhere to the contractual obligations and operational standards set forth in the agreement.