What is the consequence if a Buona franchisee is in default at the time of requesting a transfer?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if a franchisee is in default under any agreement with Buona or its affiliates at the time they request the right to transfer their franchise, or at the time the franchised business is to be transferred, the transfer will not be approved. This condition is determined at Buona's sole discretion.
This means that a Buona franchisee cannot transfer their franchise if they have any outstanding financial or operational defaults. This includes failure to pay royalties, marketing fund contributions, or any other financial obligations. It also covers non-monetary defaults, such as failure to adhere to operational standards or brand guidelines.
For a prospective Buona franchisee, this underscores the importance of maintaining compliance with all agreements. Defaulting on any agreement can not only lead to termination of the franchise agreement but also prevent the franchisee from selling the business. This provision protects Buona by ensuring that any incoming franchisee is taking over a business that is in good standing and fully compliant with the franchise agreement. Franchisees should ensure they remain in good standing if they anticipate wanting to transfer the franchise in the future.