For a Buona franchise, what document must all persons who own any interest in the Entity sign to guarantee the Franchisee's performance under the Franchise Agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 6.1 Ownership of Franchisee. Prior to the opening of the Franchised Business, any individual signing as franchisee shall establish a corporation, limited liability company, general partnership or limited partnership ("Entity"), to own and operate the Franchised Business and shall assign this Agreement to the Entity. Franchisee's owners, shareholders, officers, directors, members, managers and partners (or persons holding comparable positions in non-corporate entities) shall be referred to herein as "Principals". Franchisee must complete and update throughout the Term, as necessary, the "Statement of Ownership" attached as Exhibit D, and:
- (a) All persons who own any interest in the Entity must guaranty Franchisee's performance under this Agreement by signing the "Guaranty and Assumption of Franchisee's Obligations" attached as Exhibit E;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if the franchisee is a corporation, limited liability company, general partnership, or limited partnership (referred to as an "Entity"), all individuals who own any interest in that Entity must sign a specific document. This document is the "Guaranty and Assumption of Franchisee's Obligations," which is attached as Exhibit E to the Franchise Agreement.
This requirement ensures that Buona has a personal guarantee from all owners of the franchisee entity, holding them accountable for the franchisee's performance and obligations under the Franchise Agreement. This is a common practice in franchising, as it provides the franchisor with added security and recourse in case the franchisee fails to meet its contractual obligations.
For a prospective Buona franchisee, this means that if you plan to operate the franchise through a business entity, you and all other owners of that entity will be required to sign the Guaranty and Assumption of Franchisee's Obligations. This legally binds you to the terms of the Franchise Agreement and makes you personally liable for the franchise's performance. It is important to carefully review Exhibit E and understand the full scope of your obligations before signing.