Is the Buona franchisee required to ensure compliance with the franchise agreement requirements when the franchisor operates the business due to default?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
tice of default, Franchisor may, at its option, enter upon the Premises and exercise complete authority with respect to the operation of the Franchised Business until such time as Franchisor determines that the default has been cured and that there is compliance with the requirements of this Agreement. Franchisee acknowledges and agrees that Franchisor's agent or other representative designated by Franchisor may take over, control and operate the Franchised Business, that Franchisee shall pay Franchisor the then-current published fee for such management service, plus all travel expenses, room and board and other expenses reasonably incurred by such agent or representative so long as it shall be required to enforce compliance with this Agreement. Franchisee further acknowledges that if Franchisor temporarily operates the Franchised Business on Franchisee's behalf under this Paragraph 16.8, Franchisee will indemnify and hold harmless Franchisor and Franchisor's agent or representative respecting any and all claims arising out of Franchisor's operation of the Franchised Business under this Paragraph 16.8. Nothing herein shall require Franchisor to operate the Franchised Business when Franchisee is in default.
- 16.9 Monetary Fees for Non-Compliance. In addition to any and all other remedies available to Franchisor under this Agreement or under the law upon a default by Franchisee, Franchisor may impose on Franchisee monetary non-compliance fees for the defaults described in this Section 16.9:
- a. Failure to Report Gross Revenues. Franchisee shall pay Franchisor a fee of One Hundred Dollars ($100) per day, beginning on the first day after performance is due, up through and including the day the default is cured, if Franchisee fails to report the Gross Revenues of the Franchised Business and/or Daily Flash Reports as set forth in Section 4.2 by the stated deadline.
- b. Failure to Furnish Reports, Financial Statements and Tax Returns. Franchisee shall pay Franchisor
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if a franchisee defaults on the franchise agreement, Buona has the option to take over and operate the franchised business. The franchisee is responsible for paying Buona a fee for this management service, as well as covering all travel expenses, room and board, and other expenses incurred by Buona's agent or representative. This obligation continues as long as it is necessary to enforce compliance with the agreement.
Furthermore, the franchisee is required to indemnify and hold Buona harmless from any claims arising out of Buona's operation of the franchised business during this period. However, the FDD states that Buona is not required to operate the franchised business even if the franchisee is in default.
In addition to other remedies available to Buona, the document outlines monetary non-compliance fees that Buona may impose on the franchisee for specific defaults. For example, if the franchisee fails to report gross revenues or furnish required reports, financial statements, or tax returns, Buona can charge a fee of $100 per day until the default is resolved. This highlights the franchisee's ongoing financial responsibility even when Buona steps in to manage the business due to default.