What dependency exists for determining the Approved Location and Protected Area for a Buona franchise?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
o operate one Franchised Business, and Franchisee accepts the obligation to operate the Franchised Business during the Term in the following general area: _______________________________. Upon approval of Franchisee's location by Franchisor, Franchisor and Franchisee shall execute Exhibit A attached hereto which will identify the Approved Location.
- 1.2 Operation of the Franchised Business. Franchisee shall operate the Franchised Business, and use the Marks and the System in connection with the Franchised Business, as the Marks and the System may be modified, improved and developed by Franchisor from time to time, only in accordance with the terms and conditions of this Agreement. Franchisee shall use its best efforts to develop and promote the Franchised Business. All products and services must be sold by Franchisee only from the Approved Location. Franchisee may not use other channels of distribution such as the internet, catalog sales, telemarketing or other direct marketing to make sales outside of and apart from the operation of the Franchised Business at the Approved Location without Franchisor's prior written consent, which may be withheld by Franchisor in its sole discretion.
- 1.3 Protected Area. Subject to the terms and conditions of this Agreement and provided Franchisee or any of its affiliated companies is not otherwise in default of this Agreement or in default of any other agreement with Franchisor or with a parent, subsidiary or affiliate of Franchisor ("Affiliates"), Franchisor shall not establish, nor grant another the right to establish a Buona Restaurant during the Term, within the area described in Exhibit A of this Agreement (the "Buona Protected Area"), without Franchisee's prior written consent.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the determination of the Protected Area is dependent on the Approved Location. Upon approval of the franchisee's location by Buona, both parties must execute Exhibit A, which identifies the Approved Location. The Protected Area is then defined around this Approved Location.
The Protected Area's size varies based on the location's environment. For a non-urban location, the Protected Area will have a minimum population of 60,000 people. If the Approved Location is in an urban area, the Protected Area will be a one-half (1/2) mile radius around it. This distinction acknowledges the different population densities and market dynamics between urban and non-urban settings.
However, the Protected Area has limitations. Buona retains the right to franchise or operate Buona Businesses within the Protected Area in specific 'Captive Locations.' These locations include transportation facilities like airports and train stations, educational facilities such as schools and universities, institutional feeding facilities like hospitals and corporate cafeterias, and government institutions like military bases. This means that even within a franchisee's Protected Area, Buona can still establish other outlets in these specified locations, which could impact the franchisee's potential customer base.