What is the cure period afforded to a Buona franchisee before termination for insolvency?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.2 You shall be in default under this Agreement, and all rights granted herein to you shall automatically terminate without notice or an opportunity to cure if:
- (a) you are adjudicated bankrupt, become insolvent, commits any affirmative action of insolvency or files any action or petition of insolvency, or if a receiver (permanent or temporary) of your property or any part thereof is appointed by a court of competent authority, or if you make a general assignment for the benefit of its creditors;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, a franchisee's rights to open Buona Restaurants automatically terminate without notice or opportunity to cure if the franchisee is adjudicated bankrupt, becomes insolvent, commits any affirmative action of insolvency, or files any action or petition of insolvency. This also applies if a receiver of the franchisee's property is appointed by a court, or if the franchisee makes a general assignment for the benefit of its creditors.
This means that if a Buona franchisee experiences severe financial distress leading to insolvency or bankruptcy, Buona can immediately terminate the Development Agreement without providing any time for the franchisee to rectify the situation. This is a significant risk for potential developers, as financial stability is crucial, and any missteps could lead to immediate termination of the agreement.
It is important to note that this immediate termination applies specifically to insolvency-related events. Other defaults under the Development Agreement may have different cure periods, as outlined elsewhere in the FDD. A prospective franchisee should carefully review all default and termination provisions to understand their rights and obligations fully.