What happens if a lien is placed on a Buona Franchised Restaurant for 30 days?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.1. Definitions. The term "Event of Default" means the occurrence and continuation of any one (1) or more of the following events:
- (a) any failure of Debtor promptly and faithfully to pay, observe and perform, when due, any of the Obligations;
- (b) if Debtor becomes insolvent, commits an act of bankruptcy, files a voluntary petition in bankruptcy, or an involuntary petition in bankruptcy is filed, or a permanent or temporary receiver or trustee for the Buona Restaurant, or all or substantially all of the Debtor's property, is appointed by any court and such appointment is not actively opposed through legal action, or Debtor makes an assignment or arrangement for the benefit of creditors, or calls a meeting of creditors, or Debtor makes a written statement to the effect that he or it is unable to pay his or its debts as they become due, or a levy of execution is made upon Debtor, or an attachment or lien outstanding with respect to the Buona Restaurant for thirty (30) days, unless the attachment or lien is being duly contested in good faith by Debtor and Secured Party is advised in writing
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if a lien or attachment is placed on a Buona restaurant and remains outstanding for 30 days, it constitutes an event of default, unless the franchisee is actively contesting the lien in good faith and has advised the Secured Party (likely Buona) in writing.
This means that a franchisee facing such a lien must take immediate action to either resolve the lien or formally contest it. Failure to do so within 30 days could trigger the default clauses in the franchise agreement, potentially leading to termination of the franchise. The requirement to notify the Secured Party in writing highlights the importance of clear communication with Buona in such situations.
This clause is a fairly standard protective measure for franchisors. Liens and attachments can indicate financial instability, which could negatively impact the Buona brand and its reputation. By including this default provision, Buona aims to ensure that its franchisees maintain a certain level of financial health and stability. Franchisees should be diligent in managing their finances and addressing any potential liens promptly to avoid triggering this default scenario.