How does the Buona franchisor satisfy its obligations when exercising discretion or rights reasonably?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 25.7 Franchisor's Reasonable Business Judgment.
Whenever Franchisor reserves discretion in a particular area or where Franchisor agrees to exercise its rights reasonably, in good faith or as it deems necessary or advisable, Franchisor will satisfy its obligations whenever Franchisor exercises reasonable business judgment in making its decision or exercising its rights.
Franchisor's decisions or actions will be deemed to be the result of reasonable business judgment, even if other reasonable or even arguably preferable alternatives are available, if Franchisor's decision or action is intended, in whole or significant part, to promote or benefit the System and Buona Businesses generally, even if the decision or action also promotes Franchisor's financial or other individual interest.
Examples of items that will promote or benefit all Buona Businesses and the System include but are not limited to enhancing the value of the Marks, improving customer service and satisfaction, improving product quality, improving uniformity, enhancing or encouraging modernization and improving the competitive position of the System.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, when Buona reserves discretion or agrees to exercise its rights reasonably or in good faith, it will satisfy its obligations by exercising reasonable business judgment. This means Buona's decisions are considered valid if they are based on reasonable business judgment, even if other alternatives might seem preferable.
Buona's decisions are considered reasonable if they aim to benefit the Buona system and its businesses, even if the decision also benefits Buona financially. Examples of actions that benefit the system include enhancing the value of trademarks, improving customer service and satisfaction, improving product quality and uniformity, encouraging modernization, and improving the competitive position of the system.
This clause gives Buona considerable leeway in making decisions that affect franchisees. While Buona must exercise reasonable business judgment, the definition of what is "reasonable" is broad and subjective. A prospective franchisee should recognize that Buona's interests and the franchisee's interests may not always align perfectly, and Buona's decisions can prioritize the overall system even if they are not the most beneficial for an individual franchise location.