What happens if a Franchisee attempts to transfer the Buona franchise without written consent from the Franchisor?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, attempting to transfer the franchise without prior written consent from Buona constitutes a material breach of the Franchise Agreement. This means Buona has grounds to terminate the agreement immediately, without offering an opportunity for the franchisee to correct 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 transfer, whether direct or indirect, requires approval. This includes not only the transfer of the agreement itself but also any interest in the franchise or a substantial portion of the franchised business's assets.
Even if Buona receives royalty fees or other payments from a third party, such as a potential buyer, this does not imply approval of the transfer. The franchisee must obtain explicit written consent. This stringent requirement protects Buona's interests by ensuring that any new operator meets their standards and maintains the brand's integrity.
Involuntary transfers, such as those resulting from using the agreement as loan security, are also not binding on Buona and can lead to immediate termination of the agreement without an opportunity to cure the default. This highlights the importance of adhering to the transfer conditions outlined in the Franchise Agreement to avoid potential termination and loss of the franchise.