If Buona assigns the Franchise Agreement, what must the assignee do to release Buona from its obligations?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
a) Upon Lessee's default and failure to cure the default within the applicable cure period, if any, under either the Lease or the Franchise Agreement, Franchisor will, at its option, have the right, but not the obligation, to take an automatic assignment of Lessee's interest and at any later time to re-assign the Lease to a new franchisee without Lessor's consent and to be fully released from any and all liability to Lessor upon the reassignment, provided the franchisee agrees to assume Lessee's obligations and the Lease.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if Buona defaults and fails to address the default within the given cure period under either the Lease or the Franchise Agreement, Buona has the option to take an automatic assignment of the Lessee's interest. To be fully released from any liability to the Lessor upon reassignment, the new franchisee must agree to assume the Lessee's obligations and the Lease.
This clause protects Buona by allowing them to transfer the lease to a new franchisee if the original franchisee fails to meet their obligations. This ensures the continued operation of the Buona restaurant and minimizes potential losses for Buona.
For a prospective franchisee, this means that if they take over an existing Buona location due to a previous franchisee's default, they will be required to assume all the obligations of the original lease. This could include financial obligations, operational requirements, and other terms outlined in the original lease agreement. It is important for a potential franchisee to carefully review the terms of the lease before agreeing to the assignment to fully understand their responsibilities.