What is the dependency between signing the lease or purchase agreement and executing the Buona Area Development Agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.2 You must develop each Buona Restaurant in the following manner:
- (a) By giving us written notice of your intention to begin development of the next Buona Restaurant at least thirty (30) days before the execution of the Franchise Agreement for the applicable restaurant;
- (b) By submitting to us a description of the proposed site, together with a letter of intent in a form approved by us or other evidence satisfactory to us which confirms your favorable prospects for obtaining the proposed site;
- (c) By executing the then-current form of the Franchise Agreement for the applicable restaurant at the approved site and complying with its terms. We acknowledge that the franchisee for each Franchise Agreement may be a separate entity owned by your Owners.
- (d) By executing a lease, in a form approved by us, or purchase agreement for the proposed site; and
- (e) By meeting all of the requirements for developing and opening the Buona Restaurant
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, before executing a Franchise Agreement, a developer must provide written notice of their intention to begin development at least 30 days prior. They must also submit a description of the proposed site with a letter of intent or other evidence confirming favorable prospects for obtaining the site. Additionally, the developer needs to execute a lease or purchase agreement for the proposed site in a form approved by Buona.
Buona will only execute the Franchise Agreement if the developer maintains the knowledge, experience, skills, and financial resources to perform as a franchisee and is in compliance with the Area Development Agreement, including the Development Schedule. The developer (or an affiliate) must also be in compliance with any and all existing Franchise Agreements with Buona.
In summary, while the Area Development Agreement outlines the general obligations and schedule for opening multiple Buona restaurants, the execution of each individual Franchise Agreement is contingent upon securing an approved site, providing the required notifications and documentation, and executing a lease or purchase agreement for that specific location. This ensures that each new Buona restaurant has a viable location before the franchise agreement is finalized.