Does the Buona franchise agreement rely on the franchisee's business skills and financial capacity?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 15.2 Transfer by Franchisee.
Franchisee understands and acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee, and that Franchisor has granted this Agreement in reliance on Franchisee's business skills and financial capacity.
Accordingly, neither (i) Franchisee, nor (ii) any immediate or remote successor to Franchisee, nor (iii) any individual or any Entity which directly or indirectly owns any interest in Franchisee or in this Agreement, shall sell, assign, transfer, convey, donate, pledge, mortgage, or otherwise encumber any direct or indirect interest in (i) this Agreement, (ii) Franchisee, or (iii) a substantial portion of the assets of the Franchised Business without the prior written consent of Franchisor.
Acceptance by Franchisor of any royalty fee, marketing fund contributions or any other amount accruing hereunder from any third party, including but not limited to any proposed transferee, shall not constitute Franchisor's approval of such party as a transferee or the transfer of this Agreement to such party.
Any purported assignment or transfer, by operation of law or otherwise, not having the written consent of Franchisor, shall be null and void, and shall constitute a material breach of this Agreement, for which Franchisor may then terminate without opportunity to cure pursuant to Section 16.2(f) of this Agreement.
- 15.3 Conditions of Consent.
Franchisor shall not unreasonably withhold its written approval of a transfer, provided Franchisee and the assignee or transferee have met all of the following conditions as determined by Franchisor in its sole discretion:
- (a) Franchisee shall not be in default under this Agreement or any agreement with Franchisor and its Affiliates at the time Franchisee requests the right to transfer the franchise or at the time the Franchised Business is to actually be transferred.
All accounts payable and other monetary obligations to Franchisor and its Affiliates shall be paid in full;
(b) Franchisee shall have agreed to remain obligated under the covenants contained in Article XIV hereof as if this Agreement had been terminated on the date of the transfer;
(c) The transferee must be of good moral character and reputation, in the reasonable judgment of Franchisor;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the franchise agreement emphasizes the importance of a franchisee's business skills and financial capacity. Buona grants the franchise agreement in reliance on these attributes. This means that Buona assesses a prospective franchisee's capabilities in these areas as part of the approval process.
Specifically, the agreement states that the rights and duties within it are personal to the franchisee, indicating that Buona is carefully selecting individuals they believe are capable of fulfilling the obligations. This is further reinforced by the requirement that any transfer of the franchise is contingent upon Buona's approval, which considers the transferee's character and reputation.
Furthermore, Buona acknowledges that the success of the franchise is heavily dependent on the franchisee's business abilities, efforts, and active participation. This highlights that while Buona provides support and training, the ultimate success of the venture relies significantly on the franchisee's own capabilities and commitment. This is a common arrangement in franchising, where the franchisee's entrepreneurial drive is crucial for the business's performance.