Does the Buona franchise agreement allow the franchisee to lease property to 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.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the franchise agreement prohibits a franchisee from leasing property to a Competitive Business during the term of the agreement. Specifically, the franchisee, along with its shareholders, officers, directors, members, managers, partners, and guarantors, are restricted from leasing property to a Competitive Business. This restriction applies both directly and indirectly, whether acting for themselves or in conjunction with another person or entity.
This restriction is in effect during the term of the franchise agreement. After the agreement expires or terminates, a similar restriction applies for a period of two years. During this post-term period, the franchisee is prohibited from leasing property to a Competitive Business within a 10-mile radius of the Buona location or any other existing Buona Business.
This non-compete clause ensures that franchisees do not support competing businesses that could draw customers away from the Buona system, protecting Buona's market share and brand integrity. The agreement acknowledges that those bound by the restriction possess general skills and abilities and have other opportunities to earn a living, so adherence to the restriction should not deprive them of their personal goodwill or ability to earn a living.