Besides termination, what other rights does the Buona franchisor have if the franchisee defaults?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
eloper, or any of its shareholders, members, managers, partners, officers or directors verbally or physically assaults or abuses any officer, director, member, manager or employee of Franchisor or any of its Affiliates, or any Buona franchisee or employees of franchisees, after receiving a verbal or written warning against this conduct from Franchisor regarding this conduct.
- 7.3 If you (i) fail to meet any of the deadlines set forth in the Development Schedule; (ii) fail to comply with any other term and condition of this Agreement; (iii) make or attempt to make a transfer, sale or assignment of this Agreement in violation of this Agreement; or (iv) you or other entity owned by the Owners are in default under any individual Franchise Agreement with us, or of any other agreement to which we are parties; any such event shall constitute a default under this Agreement. Upon any such default, we, in our sole discretion, may do any one or more of the following:
- (a) Terminate this Agreement and all rights granted hereunder to you without affording you any opportunity to cure the default effective immediately upon delivery to you of a written notice from us;
- (b) Reduce the number of Buona Restaurants which you have the right to establish and open pursuant to this Agreement and reduce the corresponding Development Territory; or
- (c) Exercise any other rights and remedies which we may have under applicable law.
- 7.4 Upon termination or expiration of this Agreement, all remaining rights granted to you to establish and open Buona Restaurants under this Agreement for which a Franchise Agreement has not been executed shall automatically be null and void. You shall have no right to establish, open or operate any Buona Restaurants for which a Franchise Agreement has not been executed by us prior to the date of termination or expiration of this Agreement. Upon termination or expiration of this Agreement, we will have the right to establish ourselves or through an affiliate or grant to a third party the right to establish a Buona Business within the Development Territory as long as there is no violation of the territorial protections granted to you under existing individual Franchise Agreements.
- 7.5 No default under this Agreement shall constitute a default under any Franchise Agreement between the parties hereto. The terms and conditions of each Franchise Agreement must be complied with by you or your affiliate as franchisee thereunder and shall control in determining whether any default exists under such Franchise Agreement.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, besides terminating the agreement, Buona has other options when a franchisee defaults under the Development Agreement. Buona, in its sole discretion, can reduce the number of Buona restaurants the franchisee has the right to establish and open. Along with this reduction, Buona can also reduce the corresponding Development Territory. Additionally, Buona can exercise any other rights and remedies available under applicable law.
If the Development Agreement is terminated or expires, all remaining rights granted to the franchisee to establish and open Buona restaurants for which a Franchise Agreement has not been executed automatically become null and void. The franchisee loses the right to establish, open, or operate any Buona restaurants if a Franchise Agreement hasn't been executed before the termination or expiration date. Buona retains the right to establish a Buona restaurant themselves, through an affiliate, or by granting the right to a third party within the Development Territory, provided there is no violation of territorial protections granted to the franchisee under existing individual Franchise Agreements.
In the event that a franchisee has not addressed a default within fourteen days after receiving written notice, Buona retains the option to enter the premises and assume complete authority over the operation of the franchised business. This control remains in effect until Buona determines that the default has been resolved and that the franchisee is adhering to the requirements of the agreement. This action is in addition to Buona's right to terminate the agreement and does not replace that right or any other rights Buona may possess.