If a Buona franchisee proposes to have the Franchised Business operated by another entity, does Buona have the right to approve that entity?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 3.1 The terms and conditions of this Agreement are contingent upon you being in full compliance with the Development Schedule. In addition, you must at all times after the opening of each Buona Restaurant continuously maintain in operation pursuant to each Franchise Agreement at least the number of Buona Restaurants set forth in the Development Schedule, and your Owners must at all times own a majority control over the entity that owns each Buona franchise developed hereunder. You may develop and open any Buona Restaurant earlier than the date set forth in the Development Schedule as long as you do so in compliance with this Agreement and the applicable Franchise Agreement.
- 3.2 You must develop each Buona Restaurant in the following manner:
- (a) By giving us written notice of your intention to begin development of the next Buona Restaurant at least thirty (30) days before the execution of the Franchise Agreement for the applicable restaurant;
- (b) By submitting to us a description of the proposed site, together with a letter of intent in a form approved by us or other evidence satisfactory to us which confirms your favorable prospects for obtaining the proposed site;
- (c) By executing the then-current form of the Franchise Agreement for the applicable restaurant at the approved site and complying with its terms. We acknowledge that the franchisee for each Franchise Agreement may be a separate entity owned by your Owners.
- (d) By executing a lease, in a form approved by us, or purchase agreement for the proposed site; and
- (e) By meeting all of the requirements for developing and opening the Buona Restaurant
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
The 2025 Buona Franchise Disclosure Document states that if a franchisee is developing multiple Buona restaurants, the franchisee can establish a separate entity to own each franchise. However, the owners of the original franchise must maintain majority control over any entity that owns a Buona franchise developed under the agreement.
While the FDD does not explicitly state that Buona must approve the operating entity, it does state that the franchisee must provide written notice of their intention to begin development of the next Buona Restaurant at least thirty (30) days before the execution of the Franchise Agreement for the applicable restaurant. The franchisee must also submit a description of the proposed site, together with a letter of intent in a form approved by Buona or other evidence satisfactory to Buona which confirms the franchisee's favorable prospects for obtaining the proposed site. The franchisee must also execute a lease, in a form approved by Buona, or purchase agreement for the proposed site.
Therefore, while the franchisee can use a separate entity, Buona retains significant control through approval of the site, lease, and the requirement that the original owners maintain majority control. A prospective franchisee should clarify with Buona the specific requirements and procedures for establishing a separate entity to operate a franchise to ensure full compliance and avoid any potential conflicts.