Can Buona assign the Franchise Agreement to another party?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 15.2 Transfer by Franchisee.
Franchisee understands and acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee, and that Franchisor has granted this Agreement in reliance on Franchisee's business skills and financial capacity.
Accordingly, neither (i) Franchisee, nor (ii) any immediate or remote successor to Franchisee, nor (iii) any individual or any Entity which directly or indirectly owns any interest in Franchisee or in this Agreement, shall sell, assign, transfer, convey, donate, pledge, mortgage, or otherwise encumber any direct or indirect interest in (i) this Agreement, (ii) Franchisee, or (iii) a substantial portion of the assets of the Franchised Business without the prior written consent of Franchisor.
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.
- 15.3 Conditions of Consent.
Franchisor shall not unreasonably withhold its written approval of a transfer, provided Franchisee and the assignee or transferee have met all of the following conditions as determined by Franchisor in its sole discretion:
- (a) Franchisee shall not be in default under this Agreement or any agreement with Franchisor and its Affiliates at the time Franchisee requests the right to transfer the franchise or at the time the Franchised Business is to actually be transferred.
All accounts payable and other monetary obligations to Franchisor and its Affiliates shall be paid in full;
(b) Franchisee shall have agreed to remain obligated under the covenants contained in Article XIV hereof as if this Agreement had been terminated on the date of the transfer;
(c) The transferee must be of good moral character and reputation, in the reasonable judgment of Franchisor;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the franchisee's ability to transfer the Franchise Agreement is restricted. Buona acknowledges that the rights and duties outlined in the agreement are personal to the franchisee, and the franchise grant is based on the franchisee's business skills and financial capacity.
Therefore, the franchisee cannot sell, assign, transfer, convey, donate, pledge, mortgage, or otherwise encumber any direct or indirect interest in the agreement, the franchisee entity, or a substantial portion of the franchised business's assets without Buona's prior written consent. Buona's acceptance of fees from a third party does not automatically constitute approval of a transfer to that party.
Any transfer without Buona's written consent is considered null and void and constitutes a material breach of the agreement, potentially leading to termination without an opportunity to cure the breach. However, Buona will not unreasonably withhold approval of a transfer if the franchisee and the proposed transferee meet certain conditions. These conditions include the franchisee not being in default under any agreement with Buona or its affiliates, fulfilling all monetary obligations to Buona and its affiliates, and agreeing to remain obligated under specific covenants as if the agreement had been terminated on the transfer date. The transferee must also be of good moral character and reputation, as determined by Buona.