After completing the Development Schedule and the termination of exclusive rights to the Development Area, what rights of first refusal does a Buona franchisee have, assuming full compliance with the Development Agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 4.2 Following the completion of the Development Schedule and the termination of your exclusive rights to the Development Area, provided you are in full compliance with this Agreement, you shall have the rights of first refusal set forth below:
- (a) In the event we seek to establish or license others to establish a Buona Restaurant within the Development Area, we shall first offer you the option to establish such additional Buona Restaurants under our then-current terms and conditions. We shall provide you with written notice of our intent to establish or license another to establish an additional Buona Restaurant along with a general description of the proposed Buona Restaurant, a copy of the then-current Franchise Disclosure Document and Franchise Agreement and all other documents we deem necessary to include with the notice. You shall have thirty (30) days from the receipt of our notice to exercise the option to establish such additional Buona Restaurants by executing the Franchise Agreement and all other documents we require for such additional Buona Restaurants and to pay the initial fee due under the agreement. If you fail to execute the Franchise Agreement and other required documents and to pay the initial fee required under the Franchise Agreement within the said thirty (30) day period, you shall have no further right to establish or operate such additional Buona Restaurant. Notwithstanding the foregoing, in the event our bona fide arrangements or agreements with a bona fide third party, the lease restrictions for the proposed premises of the Buona Restaurant, or other circumstances or conditions related to the establishment of the additional Buona Restaurant, prevent or restrict you from operating the additional Buona Restaurant or restrict or prevent us from offering you the rights set forth in this Paragraph, we shall have no obligation to offer you the right to establish or operate the additional Buona Restaurant.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, a franchisee in full compliance with the Development Agreement has specific rights of first refusal after completing the Development Schedule and the termination of exclusive rights to their Development Area. If Buona seeks to establish or license others to establish a Buona Restaurant within the franchisee's Development Area, Buona must first offer the franchisee the option to establish the additional Buona Restaurant. This offer will be under Buona's then-current terms and conditions.
Buona will provide the franchisee with written notice of their intent to establish or license another to establish an additional Buona Restaurant. This notice will include a general description of the proposed Buona Restaurant, a copy of the then-current Franchise Disclosure Document and Franchise Agreement, and any other documents Buona deems necessary. The franchisee then has thirty days from the receipt of the notice to exercise their option. To do so, they must execute the Franchise Agreement and all other required documents, and pay the initial fee due under the agreement within that 30-day period.
However, there are exceptions to this right of first refusal. If bona fide arrangements or agreements with a third party, lease restrictions for the proposed premises, or other circumstances prevent the franchisee from operating the additional Buona Restaurant, or prevent Buona from offering the rights, Buona has no obligation to offer the franchisee the right to establish or operate the additional Buona Restaurant. This means that a franchisee's right of first refusal is not absolute and can be overridden by other business considerations or legal restrictions.