Does the Buona franchise agreement allow the franchisee to advise a Competitive Business during the term?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee covenants that Franchisee and any of its shareholders, officers, directors, members, managers, partners and guarantors, either directly or indirectly, for itself or themselves or on behalf of, or in conjunction with, any other person or entity, regardless of the cause for termination shall not:
- (a) For a period of two (2) years following the expiration or termination of this Agreement, have any ownership interest in, maintain, operate, engage in, serve as a director, officer, manager, employee, consultant or representative of, grant a franchise to, advise, help, make loans to, lease property to, or have any interest in, directly or indirectly, a Competitive Business that is located within a radius of ten (10) miles of (i) the location specified in the Approved Site Location Addendum as described in Article I or (ii) the location of any other Buona Business, whether owned by Franchisor or any other Buona franchisee, in existence as of the date of expiration or termination of this Agreement.
This restriction will not apply to the ownership of less than 2% of the outstanding shares of a publicly-traded security.
Franchisee and its officers, directors, shareholders, managers, members, partners and guarantors expressly acknowledge that they possess skills and abilities of a general nature and have other opportunities for exploiting those skills.
As a result, adherence to this restriction will not deprive them of their personal goodwill or ability to earn a living.
- 14.4 Nondisclosure and Noncompetition Agreement*.* Franchisee must have its shareholders, officers, directors, members, managers, partners, guarantors, supervisory and principal employees, including managers and assistant managers (as a condition to their employment), anyone Franchisee may choose to send to training, and anyone who has access to the Manual or any of Franchisor's proprietary information or Confidential Information, execute Franchisor's standard Nondisclosure and Noncompetition Agreement (which is an exhibit to the Franchise Disclosure Document and as may be updated in the Manual) before performing any work at the Franchised Business or otherwise having access to Franchisor's proprietary information.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the franchise agreement restricts a franchisee from advising a Competitive Business during a specific period. Specifically, for a period of two years following the expiration or termination of the Franchise Agreement, the franchisee is prohibited from advising a Competitive Business. This restriction applies to the franchisee and any of its shareholders, officers, directors, members, managers, partners, and guarantors.
The term "Competitive Business" refers to any business located within a 10-mile radius of either the franchisee's Approved Site Location or any other Buona Business. This includes businesses owned by Buona or other Buona franchisees that existed as of the date of the agreement's expiration or termination. The restriction covers a wide range of activities, including having any ownership interest in, maintaining, operating, engaging in, serving as a director, officer, manager, employee, consultant, or representative of, granting a franchise to, helping, making loans to, or leasing property to a Competitive Business.
This non-compete clause does not prevent the franchisee from owning less than 2% of the outstanding shares of a publicly-traded security. Buona emphasizes that the franchisee possesses general skills and abilities and has other opportunities to use those skills, so adhering to this restriction should not deprive them of their personal goodwill or ability to earn a living. Franchisees must also ensure that their shareholders, officers, directors, members, managers, partners, guarantors, supervisory and principal employees, including managers and assistant managers, sign Buona's standard Nondisclosure and Noncompetition Agreement.