What happens if a Buona franchisee loses the right to possession of the premises?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Franchisee at any time ceases to operate the Franchised Business for fortyeight (48) hours or more or otherwise abandons the Franchised Business, or loses the right to possession of the premises of the Franchised Business, or causes its lease for the premises of the Franchised Business to be terminated, or otherwise forfeits the right to do or transact business in the jurisdiction where the Franchised Business is located.
However, if, through no fault of Franchisee, the premises are damaged or destroyed by an event not within the control of Franchisee such that repairs or reconstruction cannot be completed within six (6) months thereafter, then Franchisee shall have thirty (30) days after such event in which to apply for Franchisor's approval to relocate the Franchised Business and/or reconstruct the premises, which approval shall not be unreasonably withheld, provided Franchisee is not then in default under this Agreement or any other agreement between Franchisee and Franchisor or any of its Affiliates, but may be conditioned upon the payment of an agreed minimum royalty to Franchisor during the period in which the Franchised Business is not in operation;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, a franchisee's failure to maintain possession of the premises can have significant repercussions. Specifically, if a franchisee loses the right to possess their franchised business location, or causes the lease to be terminated, or forfeits the right to conduct business in the relevant jurisdiction, it constitutes a breach of the franchise agreement. However, there is an exception: if the premises are damaged or destroyed through no fault of the franchisee, making repairs or reconstruction unfeasible within six months, the franchisee has 30 days to seek approval to relocate or reconstruct the premises. This approval cannot be unreasonably withheld, provided the franchisee isn't in default and may be conditional on paying a minimum royalty during the period of non-operation.
Buona retains some discretion in these matters. The franchisor may extend the period for obtaining site approval if the delays are outside the franchisee's control or due to mutually agreed-upon reasons. This flexibility could be crucial for franchisees facing unforeseen challenges in securing or maintaining their location.
This clause highlights the importance of maintaining a secure lease and complying with local business regulations. Franchisees should ensure they have robust lease agreements and contingency plans to address potential disruptions to their business location. The possibility of paying a minimum royalty during a period of non-operation should also be factored into the franchisee's financial planning.