Can a Buona franchisee grant a security interest in the franchise agreement?

According to Buona's 2025 Franchise Disclosure Document, a franchisee is explicitly prohibited from granting a security interest in the franchise agreement. This restriction means that a Buona franchisee cannot use the franchise agreement itself as collateral to secure financing or any other type of obligation.

This condition protects Buona by preventing the franchise rights from falling into the hands of a lender or other third party without the franchisor's consent. If a franchisee were to default on a loan secured by the franchise agreement, the lender could potentially try to take over the franchise, which Buona does not allow. This provision ensures that Buona maintains control over who operates its franchises and upholds brand standards.

This restriction is relatively common in franchising. Franchisors typically want to carefully control who can operate a franchise under their brand name. By preventing franchisees from granting security interests in the franchise agreement, Buona retains the ability to approve any potential new franchisee, even in situations where the original franchisee is in financial distress.