How much notice will a Buona franchisee receive regarding the sale of collateral after an Event of Default?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) if Debtor abandons, surrenders or transfers control of the operation of the Franchised Business without Secured Party's prior written consent; or
- (e) if Debtor is a corporation, limited liability company, partnership, joint venture or other legal entity, any action is taken which purports to merge, consolidate, dissolve or liquidate Debtor without the prior written consent of Secured Party.
- 3.2. Remedies. Upon the occurrence of an Event of Default, all amounts payable to Secured Party shall become immediately due and payable and Secured Party shall have all the rights and remedies of a secured party under the Uniform Commercial Code as in effect in the state or states in which the Collateral may be located, including, but not limited to, the right to enter upon the Franchised Restaurant peaceably and remove all Collateral. Secured Party shall give Debtor reasonable notice of the time and place of any public or private sale or other intended disposition of all or any particular Collateral, as the case may be. Debtor agrees that the requirement of reasonable notice shall be met if notice is mailed to Debtor at its address first above written not less than five (5) business days prior to the sale or other disposition. Expenses of retaking, holding, preparing for sale, selling or the like, shall include, without limitation, Secured Party's reasonable attorneys' fees and other legal expenses. Secured Party's rights and remedies, whether pursuant hereto or pursuant to the Illinois Uniform Commercial Code or any other statute or rule of law conferring rights similar to those conferred by the Illinois Uniform Commercial Code, shall be cumulative and not alternative.
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- Notices. Any notice, request or other communication to either party by the other as provided for herein shall be given in writing and shall be deemed given on the date the same is (i) actually received or (ii) three (3) days after being mailed by certified or registered mail, return receipt requested, postage prepaid and addressed to the addresses first set forth below. The person and the place to which notices or copies of notices are to be mailed to either party may be changed from time to time by such party by written notice to the other party.
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- Applicable Law. This Agreement shall be governed by and interpreted under the laws of the State of Illinois, without regard to the principles of conflict of laws thereof.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if an Event of Default occurs, Buona, as the Secured Party, must provide the franchisee (Debtor) with reasonable notice regarding the time and place of any public or private sale or disposition of the collateral. The franchise agreement specifies that mailing a notice to the franchisee's address at least five business days before the sale or disposition constitutes reasonable notice.
This means that a Buona franchisee facing the sale of collateral due to defaulting on their obligations will receive a minimum of five business days' notice before the sale occurs. This notice period allows the franchisee some time to potentially address the default, seek legal counsel, or explore options to mitigate the loss of their collateral. The agreement also states that Buona has rights and remedies under the Uniform Commercial Code and can recover expenses related to retaking and selling the collateral, including attorney's fees.
The notice must be sent to the franchisee's address. It is important for franchisees to keep their address current with Buona to ensure they receive critical communications like default and sale notices. The agreement is governed by Illinois law, which includes the Illinois Uniform Commercial Code, so the franchisee's rights are also protected by Illinois law.
While five business days' notice is defined as 'reasonable' within the agreement, franchisees should be aware that this may be a relatively short period to respond effectively. Franchisees should understand what constitutes an Event of Default and proactively manage their business to avoid such situations. If a franchisee anticipates difficulty in meeting their obligations, they should communicate with Buona as early as possible to explore potential solutions.