What is the consequence of operating the Buona Franchised Business by any party other than Franchisee, without prior written consent?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
If at any time you propose that the Franchised Business to be operated or managed by an entity or individual other than Franchisee, we reserve the right to review and approve the operating or managing entity or individual and to require and approve an operating or management agreement prior to such party's assumption of operations. We may reject the operating entity, the individual operator or the
operating or management agreement in our discretion. If approved by us, the operating entity and/or individual must agree in writing to comply with all of Franchisee's obligations under the Franchise Agreement as though such party were the franchisee designated therein, on such form as may be designated by us. The operation of the Franchised Business by any party other than Franchisee, without our prior written consent, is a default of the Franchise Agreement for which we may terminate the Franchise Agreement.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 51–52)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if the Buona franchised business is operated by any party other than the franchisee without prior written consent from Buona, it constitutes a default of the Franchise Agreement. This unauthorized operation can lead to the termination of the Franchise Agreement by Buona.
Buona requires that a principal owner with at least a 10% ownership interest have supervisory responsibility over the franchised business. Alternatively, a designated management employee who has successfully completed Buona's training program must devote full-time energy and best efforts to the business's development, promotion, management, and operation. This designated manager doesn't need to have any equity interest in the franchisee entity.
If a franchisee proposes that the franchised business be operated or managed by another entity or individual, Buona reserves the right to review and approve the operating or managing party and to require and approve an operating or management agreement before the new party assumes operations. Buona retains the discretion to reject the proposed operating entity, individual operator, or management agreement. If Buona approves the arrangement, the operating entity or individual must agree in writing to comply with all of the franchisee's obligations under the Franchise Agreement as if they were the franchisee.