What actions by a Buona developer or its affiliates related to criminal activity can lead to default?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
n or mortgage against Developer's premises or business assets is instituted against you and not dismissed within thirty (30) days, or is not in the process of being dismissed; provided, however, that Franchisor reserves the right to be named as trustee or receiver in any voluntary petition for bankruptcy or insolvency filed by you;
- (e) upon the dissolution of the entity that is Developer is dissolved, or upon the death of one or more of your Owners;
- (f) Developer or any of its shareholders, members, managers, partners, officers, directors or guarantors, is indicted for, convicted of, or pleads guilty to a felony, a crime involving moral turpitude, or any other crime or offense that Franchisor believes is reasonably likely to have an adverse effect on the System, the Marks, or the goodwill associated with the System and the Marks, or Franchisor's interest in the System or the Marks;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, a developer can be in default of their agreement if they, their shareholders, members, managers, partners, officers, or directors are indicted for, convicted of, or plead guilty to a felony. This also applies to crimes involving moral turpitude or any other crime or offense that Buona believes is reasonably likely to negatively impact the Buona system, the brand's trademarks, or the associated goodwill. This clause protects Buona from reputational damage or legal issues stemming from criminal activities of its developers or their affiliates.
Additionally, a developer can be in default if they, or any of the aforementioned related parties, verbally or physically assault or abuse any officer, director, member, manager, or employee of Buona or its affiliates. This also extends to any Buona franchisee or their employees. However, this only applies after the developer has received a verbal or written warning from Buona regarding such conduct. This provision aims to ensure a safe and respectful environment within the Buona franchise system and to protect individuals associated with the brand from harm or abuse.
These stipulations are fairly standard in franchise agreements, as franchisors need to protect their brand image and the integrity of their system. Prospective Buona developers should be aware of these conditions and ensure that they and their associated parties maintain a high standard of ethical and legal conduct to avoid potential default and termination of their development agreement.