If a Buona franchisee is transferring their franchise, can the new franchise agreement contain different terms?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- (f) The transferee shall execute, at Franchisor's option, (i) written assignment, in form satisfactory to Franchisor, pursuant to which the transferee shall assume all of the obligations of Franchisee under this Agreement and any other agreement relating to the Franchised Business to be transferred; or (ii) Franchisor's then-current form of dual brand Franchise Agreement and such other then-current ancillary agreements as Franchisor may reasonably require.
The then-current form of the Franchise Agreement may contain new or significantly different terms, including but not limited to a higher royalty fee and advertising fund contribution and less territorial protection than contained in this Agreement.
The then-current form of the Franchise Agreement will expire on the expiration date of this Agreement and will contain the same renewal rights, if any, as are available to Franchisee under this Agreement;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, when a franchisee transfers their franchise to a new owner, Buona has the option to require the transferee to sign Buona's then-current form of Franchise Agreement. This new agreement may include terms that are different from the original agreement.
These differences can include, but are not limited to, higher royalty fees, increased advertising fund contributions, and reduced territorial protection compared to the original agreement. However, the new agreement will maintain the same expiration date and renewal rights, if any, as the original agreement.
This means that a prospective Buona franchisee who is considering purchasing an existing franchise should be aware that the terms of the franchise agreement could be less favorable than those of the original franchisee. It is important to carefully review the then-current form of the Franchise Agreement to understand the potential changes and their financial implications.