What are the conditions under which the Buona franchise agreement can be terminated, as implied in Item 5 regarding the refund of the initial fee, and how does this relate to the franchisee's obligations outlined in Item 9?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| f. Termination by us with cause | Section 7 | We can terminate if you commit a listed violation. |
| h. "Cause" defined - defaults which cannot be cured | Section 7 | Bankruptcy or similar proceeding, failure to comply with development schedule, breach of the agreement, unauthorized transfer, breach of any Franchise Agreement. |
| i. Your obligations on termination/ non-renewal | Section 7.4 | No further right to develop; however, termination does not affect existing franchise agreements. |
| j. Assignment of contract by us. | Section 8.1 | We have an unrestricted right to assign. |
| Provision | Section in Franchise Agreement | Summary months; sale of unapproved products or services; relocation without our consent; denies us access for an inspection of the Business; termination or expiration of lease; failure to timely pay loan guaranteed or provided by us; failure to timely pay suppliers or landlord more than 3 times; material misrepresentation in the purchase of the Franchise; receipt of 3 or more default notices during the term; and bankruptcy. Your rights to operate the food truck can be terminated if you operate the Food Truck outside your Protected Area without our consent. Your franchise agreement can be terminated if you operate your food truck in the Protected Area of another franchisee. |
| j. Your obligations on termination/non-renewal | Section 17.1 | Obligations include the immediate cessation of operating the Buona Business and use of any of our trade dress, Marks, or advertising materials; the immediate return of the Manual, training and other related materials; a complete de identification from the Buona Business; assignment of telephone numbers and internet accounts; cancellation of assumed name; the immediate notification of all your suppliers and others with whom you do business; and payment of all amounts due (See also s. below) |
| i. Our right to operate your business upon your default | Section 16.8 | If you have not cured a default under the Franchise Agreement within 14 days after receipt of a written notice of default, we, or our agent or other representative that we designate, may enter your business premises and exercise complete authority with respect to the operation of your Buona Business until we determine that the default has been cured. You must pay us the then-current published fee for such management service, plus all travel expenses, room and board and other expenses reasonably incurred by us so long as it shall be required to enforce compliance with the Franchise Agreement. |
What This Means (2025 FDD)
Based on the 2025 FDD, Buona outlines specific conditions under which the franchise agreement can be terminated. According to Item 17, Buona can terminate the franchise agreement if the franchisee commits a listed violation, such as bankruptcy, failure to comply with the development schedule, breach of the agreement, unauthorized transfer, or breach of any Franchise Agreement. These conditions highlight the importance of adhering to the terms and conditions set forth in the franchise agreement to avoid potential termination.
Item 17 also specifies obligations upon termination or non-renewal, including the immediate cessation of operating the Buona Business, discontinuing the use of any of Buona's trade dress, Marks, or advertising materials, and the prompt return of the Manual, training, and other related materials. Additionally, franchisees must completely de-identify from the Buona Business, assign telephone numbers and internet accounts, cancel assumed names, notify all suppliers and business contacts, and fulfill all outstanding payment obligations. These obligations ensure a clean break and protect Buona's brand and proprietary information.
Furthermore, if a franchisee defaults and fails to cure the default within 14 days after receiving a written notice, Buona has the right to enter the business premises and take control of the operations until the default is resolved. The franchisee is responsible for covering the costs associated with this management service, including fees, travel expenses, room and board, and other related expenses. This provision underscores Buona's commitment to maintaining brand standards and operational integrity, even in cases of franchisee default.