Does the Buona Area Development Agreement require the Developer to sign Franchise Agreements?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Developer is obligated under this Agreement to develop, open and operate a minimum of three (3) Buona restaurants. On or before the date set forth below, Developer is obligated by this Agreement to have signed Franchise Agreements, signed leases or purchase agreements, and commenced operating Buona restaurants:
Last date for Execution of Franchise Agreement Last date for Execution of Lease or Date for Purchase Agreement for Commencement Franchisor Approved Site of Operations Upon the execution of this Agreement FRANCHISOR: CHICAGO'S ORIGINAL ITALIAN BEEF FRANCHISING LLC DEVELOPER: [ENTITY NAME] An Illinois limited liability Franchisor A Dated: Dated: FRANCHISOR INITIALS
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the Area Development Agreement (ADA) does require the developer to sign Franchise Agreements. Specifically, the developer is obligated to develop, open, and operate a minimum of three Buona restaurants. As part of this obligation, the developer must sign Franchise Agreements, along with signed leases or purchase agreements, before commencing operations at a franchisor-approved site. The execution of these agreements must occur on or before the dates specified in the Development Schedule. This schedule is outlined in Exhibit B of the Area Development Agreement.
Furthermore, the franchisor will only execute the Franchise Agreement if the developer maintains the necessary knowledge, experience, skills, and financial resources to operate as a franchisee. The developer must also comply with the Area Development Agreement, including the Development Schedule and in-term covenants. Additionally, the developer must be in compliance with any existing Franchise Agreements with Buona. The Area Development Agreement is not a Franchise Agreement itself, meaning that entering into the Area Development Agreement does not grant the developer any rights to use the Buona system or marks.
Prospective developers should note that the terms and conditions of the Area Development Agreement are contingent upon full compliance with the Development Schedule. After opening each Buona restaurant, the developer must continuously maintain operations under each Franchise Agreement, ensuring that the number of Buona restaurants matches the Development Schedule. The owners of the development entity must also maintain majority control over the entity that owns each Buona franchise developed under the agreement. The developer can open Buona restaurants earlier than the dates in the Development Schedule, provided they comply with the Area Development Agreement and the applicable Franchise Agreement.
Buona also requires the developer to follow a specific process for developing each restaurant. This includes providing written notice of their intention to begin development at least 30 days before signing the Franchise Agreement, submitting a description of the proposed site with a letter of intent, executing the current Franchise Agreement for the approved site, and executing a lease or purchase agreement for the site. The franchisee for each Franchise Agreement can be a separate entity owned by the developer's owners. These stipulations ensure that Buona maintains control over the development process and that developers are committed to fulfilling their obligations under both the Area Development Agreement and the individual Franchise Agreements.