How does the Buona franchise agreement define an 'Arrearage Agreement'?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.6 Arrearage Agreement.
Notwithstanding anything to the contrary set forth in this Agreement, Franchisee hereby acknowledges that any agreement between Franchisee and Franchisor or its Affiliates relating to past due amounts accruing hereunder (an "Arrearage Agreement"), including but not limited to any promissory note, payment plan or amendment to this Agreement shall be deemed to be a material part of this Agreement and shall be incorporated herein by reference.
A default under any Arrearage Agreement shall be deemed a material default of this Agreement, regardless of the reason Franchisee fails to pay the amount that is the subject of an Arrearage Agreement.
This provision does not require Franchisor to waive any payments due from Franchisee or to enter into any Arrearage Agreement.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, an Arrearage Agreement is defined as any agreement between the franchisee and Buona (or its affiliates) that relates to past due amounts. This can include, but is not limited to, promissory notes, payment plans, or amendments to the franchise agreement. Buona considers any Arrearage Agreement to be a material part of the overall Franchise Agreement and incorporates it by reference.
For a prospective Buona franchisee, this means that if you fall behind on payments, any agreement you make with Buona to catch up will be legally binding and considered a significant part of your franchise agreement. Defaulting on an Arrearage Agreement is considered a material default of the Franchise Agreement, regardless of the reason for the failure to pay.
It is important to note that Buona is not obligated to offer any payment waivers or enter into any Arrearage Agreement. This clause simply outlines the terms if such an agreement is made. If a franchisee is experiencing financial difficulties, they should proactively communicate with Buona to explore potential options, keeping in mind that Buona has the final say on whether to offer an Arrearage Agreement.