What is the Buona Franchisee's obligation regarding claims arising from Buona's operation of the Franchised Business during a default?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if a franchisee defaults, Buona has the option to have its agent or representative take over and operate the franchised business. During this period, the franchisee is responsible for covering the costs of this management service, including the published fee, travel expenses, room and board, and any other reasonable expenses incurred by the agent or representative.
More importantly, the franchisee must indemnify and hold Buona and its representatives harmless from any claims that arise from Buona's operation of the franchised business during this time. This means the franchisee is financially responsible for any liabilities, losses, damages, or expenses Buona incurs due to claims related to their operation of the business during the default period.
This clause protects Buona from potential lawsuits or financial burdens resulting from their management of the franchise during a franchisee's default. However, the FDD clarifies that Buona is not obligated to operate the franchised business even if the franchisee is in default. This arrangement is fairly typical in franchising, as it allows the franchisor to protect the brand and maintain operations while addressing the franchisee's default, but it places a significant financial risk on the franchisee.