If a Buona franchisee defaults on another agreement with the franchisor, can the Buona franchise agreement be terminated?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
16.5 Cross-Default and Cross-Termination Provisions.
(a) A default by Franchisee under this Agreement will be deemed a default of all agreements between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates. A default by Franchisee under any other agreement between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates will be deemed a default under this Agreement. A default by the guarantors of this Agreement or any other agreement of guaranty will be deemed a default of this Agreement. For purposes of clarity, any agreements between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates include, without limitation, any other Franchise Agreement or Area Developer Agreement.
- (b) If this Agreement is terminated as a result of a default by Franchisee (or any affiliate of Franchisee), Franchisor or its Affiliates may, at their option, elect to terminate any or all other agreements between Franchisee (or an affiliate of Franchisee) and Franchisor or its Affiliates.
If any other agreement between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates is terminated as a result of a default by Franchisee (or any affiliate of Franchisee), Franchisor may, at its option, elect to terminate this Agreement.
It is agreed that an incurable or uncured default under this Agreement or any other agreement between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates will be grounds for termination of this Agreement and/or all agreements between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates without additional notice or opportunity to cure.
- 16.6 Arrearage Agreement.
Notwithstanding anything to the contrary set forth in this Agreement, Franchisee hereby acknowledges that any agreement between Franchisee and Franchisor or its Affiliates relating to past due amounts accruing hereunder (an "Arrearage Agreement"), including but not limited to any promissory note, payment plan or amendment to this Agreement shall be deemed to be a material part of this Agreement and shall be incorporated herein by reference.
A default under any Arrearage Agreement shall be deemed a material default of this Agreement, regardless of the reason Franchisee fails to pay the amount that is the subject of an Arrearage Agreement.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, a default by a franchisee under any agreement with Buona or its affiliates can trigger a default under the franchise agreement. Specifically, if a franchisee or their affiliate defaults on another agreement with Buona or its affiliates, it will be considered a default under the current franchise agreement. This includes, but is not limited to, other franchise agreements or area developer agreements.
Furthermore, if the franchise agreement is terminated due to a franchisee's default, Buona has the option to terminate any or all other agreements between the franchisee (or their affiliate) and Buona or its affiliates. Conversely, if any other agreement between the franchisee and Buona is terminated due to a default, Buona can choose to terminate the franchise agreement.
Buona emphasizes that an incurable or uncured default under the franchise agreement or any other agreement between the franchisee and Buona will be grounds for terminating the franchise agreement and/or all other agreements without additional notice or opportunity to cure the default. This cross-default and cross-termination provision highlights the interconnectedness of all agreements a franchisee has with Buona, meaning a problem in one area can have serious repercussions for the entire relationship.
Additionally, any agreement between the franchisee and Buona relating to past due amounts, such as a promissory note or payment plan (referred to as an "Arrearage Agreement"), is considered a material part of the franchise agreement. Therefore, a default under any Arrearage Agreement is deemed a material default of the franchise agreement, regardless of the reason for the failure to pay.