What is the obligation of the Developer regarding the development, opening, and operation of Buona Franchised Restaurants under the Area Development Agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
shall be executed for each additional Buona Restaurant. Upon the execution of each Franchise Agreement, the terms and conditions of such Franchise Agreement shall control the establishment and operation of such Buona Restaurant. | | | | 3. | 3.1 | DEVELOPMENT OBLIGATIONS The terms and conditions of this Agreement are contingent upon you being in full compliance | | |
- 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
| ADA 2025 | - 3 - | |
|---|---|---|
| FRANCHISOR INITIALS | DEVELOPER INITIALS |
under the terms of the applicable Franchise Agreement.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, a developer entering into an Area Development Agreement is obligated to develop, open, and operate a minimum number of Buona restaurants as specified in the agreement's development schedule. The developer must maintain continuous operation of these restaurants after opening, adhering to the terms of each individual Franchise Agreement. Furthermore, the owners of the development entity must maintain majority control over the entity that owns each Buona franchise developed under the agreement. The developer can choose to open restaurants earlier than the scheduled date, provided they comply with both the Area Development Agreement and the relevant Franchise Agreement.
To begin the development of a new Buona restaurant, the developer must provide written notice to Buona at least 30 days before executing the Franchise Agreement. This notice must include a description of the proposed site and a letter of intent, or other satisfactory evidence, confirming the prospects of securing the site. The developer is also required to execute Buona's current Franchise Agreement for the specific restaurant location and adhere to its terms. Additionally, the developer must execute a lease, approved by Buona, or a purchase agreement for the proposed site and fulfill all requirements for developing and opening the Buona restaurant.
Compliance with the development schedule is critical, as the terms and conditions of the Area Development Agreement are contingent upon it. Buona is only obligated to execute the Franchise Agreement if the developer maintains the necessary knowledge, experience, skills, and financial resources to operate as a franchisee, and remains in compliance with the Area Development Agreement, including the development schedule and in-term covenants. The developer must also be in compliance with any existing Franchise Agreements with Buona. At Buona's request, the developer must provide periodic reports on their progress in developing and establishing Buona franchised restaurants, in the format and manner specified by Buona.