Does the Buona franchise agreement require a cure period for defaults related to insolvency?

According to Buona's 2025 Franchise Disclosure Document, the franchise agreement stipulates that certain insolvency-related events constitute immediate defaults without an opportunity to cure. Specifically, if a franchisee becomes insolvent or makes a general assignment for the benefit of creditors, the agreement automatically terminates without notice. Similarly, the agreement terminates without notice if the franchisee files a petition in bankruptcy or such a petition is filed against them and not opposed, or if the franchisee is adjudicated bankrupt or insolvent, or if a receiver or other custodian of the franchisee's assets is appointed.

This means that a Buona franchisee facing severe financial distress leading to insolvency or bankruptcy could immediately lose their franchise rights without any chance to rectify the situation. This is a critical point for prospective franchisees to consider, as it highlights the financial risks associated with the franchise. Unlike some other defaults that allow a cure period, insolvency triggers immediate termination, potentially leading to a swift and irreversible loss of the business.

This aspect of the Buona franchise agreement is stricter than some franchise agreements, which may provide a cure period even for insolvency-related defaults. The absence of a cure period places a significant burden on the franchisee to maintain financial stability and proactively address any financial challenges. A prospective franchisee should carefully evaluate their financial resources and risk tolerance before entering into such an agreement, and perhaps seek legal counsel to fully understand the implications of these terms.