When a Buona franchise is transferred, what options does the franchisor have regarding the agreement the transferee must execute?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- (f) The transferee shall execute, at Franchisor's option, (i) written assignment, in form satisfactory to Franchisor, pursuant to which the transferee shall assume all of the obligations of Franchisee under this Agreement and any other agreement relating to the Franchised Business to be transferred; or (ii) Franchisor's then-current form of dual brand Franchise Agreement and such other then-current ancillary agreements as Franchisor may reasonably require.
The then-current form of the Franchise Agreement may contain new or significantly different terms, including but not limited to a higher royalty fee and advertising fund contribution and less territorial protection than contained in this Agreement.
The then-current form of the Franchise Agreement will expire on the expiration date of this Agreement and will contain the same renewal rights, if any, as are available to Franchisee under this Agreement;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, when a franchise is transferred, Buona has the option to require the transferee to execute one of two types of agreements. First, Buona can have the transferee sign a written assignment, in a form satisfactory to Buona. Through this assignment, the transferee assumes all of the original franchisee's obligations under the existing franchise agreement and any other related agreements. Alternatively, Buona can require the transferee to execute Buona's then-current form of franchise agreement, along with any other ancillary agreements that Buona deems reasonably necessary.
It is important to note that Buona's then-current franchise agreement may include terms that are new or significantly different from the original agreement. These differences could include, but are not limited to, higher royalty fees, increased advertising fund contributions, and reduced territorial protection for the franchisee. However, the new franchise agreement will expire on the same date as the original agreement and will offer the same renewal rights, if any, that were available to the original franchisee.
This clause allows Buona to update the terms and conditions applicable to a franchise location upon transfer, potentially increasing revenue or reducing obligations for Buona while also ensuring that all franchisees are operating under similar agreement terms. Prospective franchisees should be aware that if they purchase an existing Buona franchise, they may be subject to different and potentially more stringent terms than the original franchisee.