How does the Buona franchisor satisfy its obligations when it reserves discretion in a particular area?
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 discretionary power or agrees to act reasonably, in good faith, or as deemed necessary, it fulfills its obligations by exercising reasonable business judgment in its decisions. This means that Buona's decisions are considered satisfactory if they are made using reasonable business judgment.
Buona's decisions are considered to be the result of reasonable business judgment even if there are other reasonable or preferable options available, as long as the decision is intended to promote or benefit the Buona system and its businesses. This holds true even if the decision also benefits Buona's financial or individual interests.
Examples of actions that promote the Buona system include enhancing the value of its trademarks, improving customer service and satisfaction, improving product quality and uniformity, encouraging modernization, and improving the competitive position of the system. This clause provides Buona with considerable latitude in making decisions that affect the franchise system, as long as those decisions are reasonably intended to benefit the system as a whole.