If a Buona franchisee has an attachment or lien outstanding with respect to the Buona Restaurant, how long does the franchisee have to resolve it before it becomes an Event of Default?
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
- (c) if Debtor loses possession or the right of possession of all or a significant part of the Buona Restaurant through condemnation or casualty and the Buona Restaurant is not relocated or reopened as required by the Franchise Agreement;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, an "Event of Default" occurs if an attachment or lien remains outstanding against the Buona Restaurant for thirty (30) days. However, this is not applicable if the franchisee is actively contesting the attachment or lien in good faith and has informed the Secured Party (likely Buona) in writing.
This means a Buona franchisee has a limited time frame to resolve any outstanding attachments or liens before Buona can declare a default. Failure to address such issues within 30 days could lead to further action by Buona, as defined in their agreements.
However, if the franchisee is actively challenging the attachment or lien through appropriate legal channels and has notified Buona in writing, the 30-day period does not apply. This provides a degree of protection for franchisees who are proactively addressing such legal challenges. It is important for franchisees to maintain open communication with Buona and provide written notice of any disputes to avoid potential default declarations.