What are the non-competition restrictions during the term of the Buona Area Development Agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in ADA | Summary | |
|---|---|---|---|
| a. | Length of term of the agreement | Section 4 | Agreement expires on our acceptance and execution of the Franchise Agreement for the last franchise to be developed. |
| b. | Renewal or extension of the term | Not applicable | Not applicable |
| c. | Requirements for you to renew or extend | Not applicable | Not applicable |
| d. | Termination by you | Not applicable | Not applicable |
| e. | Termination by us without cause | Not applicable | Not applicable |
| f. | Termination by us with cause | Section 7 | We can terminate if you commit a listed violation. |
| g. | "Cause" defined - defaults which can be cured | Section 7 | Not applicable |
| h. | "Cause" defined - defaults which cannot be cured | Section 7 | Bankruptcy or similar proceeding, failure to comply with development schedule, breach of the agreement, unauthorized transfer, breach of any Franchise Agreement. |
| i. | Your obligations on termination/ non-renewal | Section 7.4 | No further right to develop; however, termination does not affect existing franchise agreements. |
| j. | Assignment of contract by us. | Section 8.1 | We have an unrestricted right to assign. |
| k. | "Transfer" by you – definition | Section 8.2 | Include transfer of any interest in the ADA or in the Developer. |
| l. | Our approval of transfer by you | Section 8.2 | You have no right to transfer any interest in the ADA or Developer. Any attempted transfer will be null and void. |
| m. Conditions for our approval of transfer | Not applicable | Not applicable | |
| n. | Our right of first refusal to acquire your business | Not applicable | Not applicable |
| o. | Our option to purchase your business | Not applicable | Not applicable |
| p. | Your death or disability | Not applicable | Not applicable |
| q. | Non-competition covenants during the term of the agreement | Section 6.4 | No involvement in a similar business or with a business granting franchises for similar businesses; subject to applicable state law. |
| Provision | Section in ADA | Summary |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 52–60)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, Section 6.4 of the Area Development Agreement outlines the non-competition covenants during the term of the agreement. Specifically, as an Area Developer, you are prohibited from involvement in a similar business or with a business that grants franchises for similar businesses. These restrictions are subject to applicable state law, meaning the specific enforcement and interpretation of these covenants can vary depending on the state in which you operate.
This non-competition clause is a standard practice in franchising, designed to protect Buona's market share and brand integrity. It prevents Area Developers from using the knowledge and resources gained from Buona to directly compete with the franchise system. The restriction extends not only to operating a competing business yourself but also to being involved with any business that franchises similar concepts, preventing you from indirectly supporting competitors.
Prospective Area Developers should carefully consider the scope and implications of this non-competition clause. It is important to understand how state law might affect its enforceability and to assess whether the restriction could limit your other business interests or opportunities during the term of the Area Development Agreement. You should seek legal counsel to fully understand the implications of this clause in your specific circumstances and jurisdiction.
It is also important to note that the FDD also details non-competition restrictions within the Franchise Agreement itself. During the term of the franchise, franchisees cannot be involved in a Competitive Business anywhere and cannot divert any business or customers of the Buona Business. They are also prohibited from soliciting Buona employees or other franchisees' employees. These restrictions are separate from those in the Area Development Agreement but highlight Buona's commitment to protecting its business interests.