For a Buona franchise, what ownership interest must the Operating Owner have in the entity?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
VI. BUSINESS DEVELOPMENT AND OPENING; RELOCATION
- 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 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, any individual signing as a franchisee must establish a business entity such as a corporation, limited liability company, or partnership to own and operate the franchised business. The agreement is then assigned to this entity. All individuals who own any interest in this entity must guarantee the franchisee's performance under the Franchise Agreement by signing a "Guaranty and Assumption of Franchisee's Obligations".
This requirement ensures that Buona franchisees operate under a legally recognized business structure, providing a clear framework for liability and responsibility. By requiring all owners to personally guarantee the franchisee's obligations, Buona aims to ensure that those with a financial stake in the business are fully committed to its success and compliance with the franchise agreement.
Prospective franchisees should carefully consider the implications of this ownership and guarantee structure. They should consult with legal and financial advisors to understand their obligations and potential liabilities as owners and guarantors. Additionally, franchisees must keep Buona updated on any changes to the ownership structure throughout the term of the agreement by updating the "Statement of Ownership" form.