Does the goodwill associated with the Buona system and marks inure to the benefit of the franchisee?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee acknowledges and expressly agrees that any and all goodwill associated with the System and identified by the Marks used in connection therewith inures directly and exclusively to the benefit of Franchisor and/or Franchisor's affiliate and is the property of Franchisor and/or Franchisor's affiliate, and that upon the expiration or termination of this Agreement or any other agreement, no monetary amount shall be assigned as attributable to any goodwill associated with any of Franchisee's activities in the operation of the Franchised Business granted herein, or Franchisee's use of the Marks.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the goodwill associated with the Buona system and its marks inures directly and exclusively to the benefit of the franchisor, not the franchisee. Specifically, the agreement states that all goodwill connected to the system and identified by the marks belongs to Buona and/or its affiliates. This means that the brand recognition and positive reputation built up through the franchisee's efforts ultimately benefit Buona.
This has significant implications for a prospective Buona franchisee. Upon expiration or termination of the franchise agreement, the franchisee will not be entitled to any monetary compensation for the goodwill generated during the operation of the franchised business. In other words, the franchisee cannot claim or sell the value associated with the brand's reputation that they helped build in their specific location. This is a fairly standard practice in franchising, as the brand and its associated goodwill are considered the intellectual property of the franchisor.
The franchisee is obligated to operate and advertise the franchised business using the marks as specified by Buona, without any modifications. They must also adhere to Buona's requirements regarding trademark registration notices. These obligations are in place to maintain uniform standards and protect the reputation and goodwill of Buona and the system. The franchisee's compliance with these standards directly contributes to the overall goodwill of the Buona brand, but the financial benefit of that goodwill remains with the franchisor.
Furthermore, the franchisee acknowledges that Buona has a prior and superior claim to the "Buona" and "The Original Rainbow Cone" trade names. The franchisee cannot use these names in the legal name of their business entity or register a trade name using the marks without Buona's prior written consent. This reinforces the franchisor's ownership and control over the brand and its associated goodwill, ensuring that the franchisee's rights are limited to the specific usage granted in the franchise agreement.