Does the Buona franchisor have an obligation to offer an Arrearage Agreement to a franchisee?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
This provision does not require Franchisor to waive any payments due from Franchisee or to enter into any Arrearage Agreement.
- 16.7 Statutory Cure Period.
If a default is curable under this Agreement, and the applicable law in the state in which the Franchised Business is located requires a longer cure period than that
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, Buona is not required to offer an Arrearage Agreement to franchisees. However, if Buona and a franchisee enter into an agreement regarding past due amounts, also known as an Arrearage Agreement, that agreement will be considered a material part of the Franchise Agreement.
According to the FDD, any default under the Arrearage Agreement will be considered a material default of the Franchise Agreement, regardless of the reason for failing to pay the amount that is the subject of the Arrearage Agreement. This means that if a franchisee enters into an Arrearage Agreement with Buona to address past due payments, failing to adhere to the terms of that agreement could result in the termination of the Franchise Agreement, regardless of the circumstances causing the payment failure.
This clause gives Buona significant power, as any misstep in the Arrearage Agreement, even due to circumstances beyond the franchisee's control, can trigger serious consequences. Prospective franchisees should carefully consider the implications of this clause and seek legal counsel to fully understand their rights and obligations should they fall behind on payments and be offered an Arrearage Agreement.