Does the Buona franchise agreement create a fiduciary relationship between the franchisor and franchisee?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 19.1 Independent Contractor. This Agreement does not establish Franchisee as an agent, legal representative, joint venturer, partner, joint employer, employee or servant of Franchisor for any purpose whatsoever, and Franchisor shall not be construed to be jointly liable for any of Franchisee's or its employees' acts or omissions under any circumstances. Franchisee is solely responsible for the dayto-day operation of the Franchised Business. It is understood and agreed that Franchisee is an independent contractor and is in no way authorized to make any contract, agreement, warranty, or representation on behalf of Franchisor. The parties further agree that this Agreement does not create any fiduciary relationship between them. During the Term and any extension hereof, Franchisee agrees to take such action as Franchisor deems reasonably necessary for Franchisee to inform and hold itself out to the public, its employees and suppliers as an independent contractor operating the Franchised Business pursuant to a franchise from Franchisor. Franchisee shall prominently display, by posting of a sign within public view on or in the premises of the Franchised Business, and on any stationery, forms and promotional material a statement that clearly indicates that the Franchised Business is independently owned and operated by Franchisee as a franchisee of Franchisor.
- 19.2 No Employment Relationship**.** Franchisee expressly acknowledges that Franchisee is not Franchisee's employer or an employer of any of Franchisee's employees. In addition, Franchisor is not a joint employer with Franchisee. Franchisee acknowledges that Franchisor's training, guidance, advice and assistance, Franchisee's obligations under this Agreement and the standards, specifications, policies and procedures required by Franchisor hereunder and in the Manuals are imposed not for the purpose of exercising control over Franchisee but rather for the limited purpose of protecting the Marks and Confidential Information, goodwill and brand consistency. The parties acknowledge and agree that Franchisee is solely responsible for the management of the Franchised Business as an independent franchise owner/operator.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the franchise agreement explicitly states that it does not create a fiduciary relationship between the franchisor and the franchisee. The agreement specifies that the franchisee is an independent contractor and is not authorized to make any agreements or representations on behalf of Buona. This is a common arrangement in franchising, where franchisees operate their businesses independently while adhering to the franchisor's system standards.
Buona emphasizes that the training, guidance, and standards it imposes are for the purpose of protecting its trademarks, confidential information, goodwill, and brand consistency, rather than to exert control over the franchisee's day-to-day management. The franchisee is solely responsible for managing their franchised business as an independent owner/operator. This distinction is important because it clarifies the roles and responsibilities of each party, ensuring that the franchisee understands their autonomy in business operations.
This arrangement has implications for both Buona and its franchisees. For Buona, it limits their liability for the franchisee's actions and ensures consistent brand standards across all locations. For the franchisee, it provides the freedom to manage their business independently but also requires them to take full responsibility for its success or failure. Prospective franchisees should carefully consider this independent contractor relationship and ensure they are comfortable with the level of autonomy and responsibility it entails.