In addition to liquidated damages, what other costs is a Buona franchisee responsible for if they breach the agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee also agrees to pay Franchisor's costs and attorney's fees in connection with enforcing this Liquidated Damages provision.
19.3 Indemnification.
- (a) Franchisee agrees to defend, indemnify and hold harmless Franchisor and its Affiliates, and their respective officers, directors, members, managers, employees, agents, predecessors, successors and assigns from all claims, demands, losses, damages, liabilities, cost and expenses (including attorneys' fees and expenses of litigation) resulting from, or alleged to have resulted from, or in connection with Franchisee's operation, possession or ownership of the Franchised Business, the Franchised Business premises, or Franchisee's use of the Marks and the System in any manner not in accordance with this Agreement, including but not limited to any claim or action based on or arising out of any injuries, including death, to persons or damage to or destruction of property, sustained or alleged to have been sustained in connection with or to have arisen out of or incidental to the Franchised Business and/or the performance of this Agreement by Franchisee, its shareholders, officers, directors, members, managers, partners, employees, agents, employees, and its subcontractors, their agents and employees or anyone for whose acts they may be liable, regardless of whether or not such claim, demand, damage, loss, liability, cost or expense is caused in whole or in part by the negligence of Franchisor, Franchisor's representatives, or the employees, agents, invitees, or licensees thereof.
If a claim for amounts owed by Franchisee to Franchisor or its affiliates is asserted in any legal proceeding before a court of competent jurisdiction, or if Franchisee or Franchisor is required to enforce this Agreement in a judicial proceeding, the party prevailing in such proceeding will be entitled to reimbursement of its costs and expenses, including reasonable accounting and legal fees, expert witness fees, court costs and other expenses of litigation, whether incurred prior to, in preparation for or in contemplation of the filing of any written demand, claim, action, hearing or proceeding to enforce the obligations of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if a franchisee breaches the franchise agreement and is subject to liquidated damages, they are also responsible for covering Buona's costs and attorney's fees associated with enforcing the liquidated damages provision. This means that beyond the liquidated damages amount, which can be substantial, a franchisee may incur additional expenses for Buona's legal actions to recover those damages.
Furthermore, the FDD states that franchisees must indemnify Buona and its affiliates from all claims, losses, damages, liabilities, costs, and expenses (including attorney's fees and expenses of litigation) resulting from the franchisee's operation, possession, or ownership of the franchised business. This indemnification extends to any claims related to the franchisee's use of Buona's marks and the system in a manner not in accordance with the agreement. This means that if a franchisee's actions lead to legal claims against Buona, the franchisee is responsible for defending and covering the costs associated with those claims.
In any legal proceeding before a court of competent jurisdiction, the prevailing party will be entitled to reimbursement of its costs and expenses, including reasonable accounting and legal fees, expert witness fees, court costs and other expenses of litigation, whether incurred prior to, in preparation for or in contemplation of the filing of any written demand, claim, action, hearing or proceeding to enforce the obligations of this Agreement. This could substantially increase the financial burden on a franchisee who is found to be in breach of contract, as they may have to cover not only their own legal costs but also those of Buona if Buona prevails in court.