After the expiration or termination of the Buona agreement, for how long are the Developer and its Owners restricted from engaging in a Competitive Business?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
9. POST-TERMINATION COVENANTS
- 9.1 Unless otherwise specified, the term "Developer" as used in this Section 9 shall include each and every Owner of Developer.
- 9.2 Developer specifically acknowledges that, pursuant to this Agreement, Developer will have access to the Confidential Information. Accordingly, Developer covenants that Developer and its Owners shall not, for a period of two (2) years after the expiration or termination of this Agreement, regardless of the cause of termination, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with any person, persons, or entity:
- (a) own, maintain, operate, engage in, consult with or have any interest in (as disclosed or beneficial owner) any Competitive Business or any entity which is franchises, licenses or develops Competitive Businesses within the Development Area, or within a ten (10) mile radius of any existing Franchised Restaurant, except under a validly existing Franchise Agreement with Franchisor. You acknowledge and agree that, after the date of this Agreement, other Franchised Restaurants may open, thereby expanding the geographical area in which you will not be able to compete with us. For purposes of this Section 9, a "Competitive Business" is defined as any retail establishment that derives more than ten percent (10%) of its gross sales from Italian beef and Italian sausage products and other Italian specialties or any retail establishment that derives more than ten percent (10%) of its gross sales from ice cream;
- (b) directly or indirectly divert or attempt to divert any former business or customer of a Franchised Restaurant to any competitive business; and
- (c) employ or seek to employ any person employed by us or our affiliate or by any other Franchised Restaurant franchisee, or otherwise directly or indirectly induce or seek to induce such person to leave his or her employment, subject to applicable law;
The ownership of two percent (2%) or less of a publicly traded Franchisor will not be deemed to be prohibited by this paragraph.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, a Developer and their Owners are restricted from engaging in a Competitive Business for a period of two years after the expiration or termination of the Development Agreement. This restriction applies regardless of the reason for termination.
During this two-year period, the Developer and their Owners are prohibited from directly or indirectly owning, maintaining, operating, engaging in, consulting with, or having any interest in a Competitive Business. This restriction applies within the Development Area or within a ten-mile radius of any existing Buona Restaurant. The agreement specifies that as new Buona Restaurants open, the geographical area in which the Developer cannot compete may expand.
A Competitive Business is defined as any retail establishment that derives more than 10% of its gross sales from Italian beef and Italian sausage products and other Italian specialties or any retail establishment that derives more than 10% of its gross sales from ice cream. The agreement does allow for the ownership of 2% or less of a publicly traded franchisor without violating the terms of the post-termination covenant.
This non-compete clause also prevents the Developer from diverting or attempting to divert any former business or customer of a Buona Restaurant to any competitive business. Additionally, the Developer is prohibited from employing or seeking to employ any person employed by Buona, its affiliates, or any other Buona franchisee, or from inducing such person to leave their employment.