What happens if a Buona franchisee attempts to transfer the agreement without written consent from the franchisor?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
anchisor under this Agreement.
15.2 Transfer by Franchisee. Franchisee understands and acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee, and that Franchisor has granted this Agreement in reliance on Franchisee's business skills and financial capacity. Accordingly, neither (i) Franchisee, nor (ii) any immediate or remote successor to Franchisee, nor (iii) any individual or any Entity which directly or indirectly owns any interest in Franchisee or in this Agreement, shall sell, assign, transfer, convey, donate, pledge, mortgage, or otherwise encumber any direct or indirect interest in (i) this Agreement, (ii) Franchisee, or (iii) a substantial portion of the assets of the Franchised Business without the prior written consent of Franchisor. Acceptance by Franchisor of any royalty fee, marketing fund contributions or any other amount accruing hereunder from any third party, including but not limited to any proposed transferee, shall not constitute Franchisor's approval of such party as a transferee or the transfer of this Agreement to such party. Any purported assignment or transfer, by operation of law or otherwise, not having the written consent of Franchisor, shall be null and void, and shall constitute a material breach of this Agreement, for which Franchisor may then terminate without opportunity to cure pursuant to Section 16.2(f) of this Agreement.
15.3 Conditions of Consent. Franchisor shall not unreasonably withhold its written approval of a transfer, provided Franchisee and the assignee or transferee have met all of the following conditions as determined by Franchisor in its sole discretion:
(a) Franchisee shall not be in default under this Agreement or any agreement with Franchisor and its Affiliates at the time Franchisee requests the right to transfer the franchise or at the time the Franchised Business is to actually be transferred. All accounts payable and other monetary obligations to Franchisor and its Affiliates shall be paid in full;
(b) Franchisee shall have agreed to remain obligated under the covenants contained in Article XIV hereof as if this Agreement had been terminated on the date of the transfer;
(c) The transferee must be of good moral character and reputation, in the reasonable judgment of Franchisor;
(d) Franchisor shall have determined, to its satisfaction, that the transferee's qualifications meet Franchisor's then-current criteria for new franchisees;
(e) The terms and conditions of the proposed transfer, including all financial terms of the proposed transfer, shall be provided in writing to Franchisor at least fifteen (15) business days prior to the proposed effective date of the transfer, and shall be approved in writing by Franchisor;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if a franchisee attempts to transfer the franchise agreement without obtaining prior written consent from Buona, it constitutes a material breach of the agreement. This gives Buona the right to terminate the agreement immediately, without offering an opportunity to cure the breach.
Buona emphasizes that franchise rights and duties are personal to the franchisee, and the agreement is granted based on the franchisee's business skills and financial capacity. Therefore, any direct or indirect interest in the agreement, the franchisee, or a substantial portion of the franchised business's assets cannot be sold, assigned, transferred, or encumbered without Buona's prior written consent. The acceptance of fees from a third party does not constitute approval of the transfer or the transferee.
Furthermore, involuntary transfers of the agreement are not binding on Buona and can lead to termination without an opportunity to cure. This includes using the agreement as security for a loan or otherwise encumbering it, unless Buona specifically consents in writing. Any attempt to transfer the agreement, in whole or in part, without written authorization from Buona, is grounds for termination without the chance to correct the action. Even transfers resulting from a court order affecting ownership interests are subject to the terms and conditions of the franchise agreement.