What happens to the rights to establish and open Franchised Buona Restaurants upon termination or expiration of the Development Agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.4 Upon termination or expiration of this Agreement, all remaining rights granted to you to establish and open Franchised Restaurants under this Agreement for which a Franchise Agreement has not been executed shall automatically be null and void.
You shall have no right to establish, open or operate any Franchised Restaurants for which a Franchise Agreement has not been executed by us prior to the date of termination or expiration of this Agreement.
Upon termination or expiration of this Agreement, we will have the right to establish ourselves or through an affiliate or grant to a third party the right to establish a Franchised Restaurant within the Development Territory as long as there is no violation of the territorial protections granted to you under existing individual Franchise Agreements.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, upon the termination or expiration of the Development Agreement, all remaining rights granted to the developer to establish and open Buona restaurants for which a Franchise Agreement has not been executed automatically become null and void. The developer loses the right to establish, open, or operate any Buona restaurants if a Franchise Agreement has not been executed by Buona before the termination or expiration date of the Development Agreement.
Following the termination or expiration, Buona retains the right to establish restaurants themselves, through an affiliate, or by granting the right to a third party to establish a Buona restaurant within the Development Territory. This is permitted as long as it does not violate any territorial protections granted to the developer under existing individual Franchise Agreements.
This means that a developer needs to be aware of the deadlines and requirements within the Development Agreement to ensure franchise agreements are executed in a timely manner. Failure to do so could result in losing the rights to develop further Buona restaurants in the designated area. This also highlights the importance of understanding the terms of existing franchise agreements to avoid any conflicts with territorial protections upon termination or expiration of the Development Agreement.