What obligations does a Buona Area Developer have upon termination or non-renewal of the 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. |
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, an Area Developer's obligations upon termination or non-renewal of the Area Development Agreement are limited. Specifically, the Area Developer loses the right to develop further Buona franchises in the designated area. However, the termination or non-renewal of the Area Development Agreement does not impact or terminate any existing franchise agreements that the Area Developer may have in place.
This means that while the Area Developer cannot open new Buona restaurants after the agreement ends, they can continue to operate any existing franchises they have already developed. This provides a level of security for the investments already made by the Area Developer.
This is a fairly standard practice in area development agreements. The termination of development rights typically does not affect the operation of already-established franchise locations. However, prospective Area Developers should carefully review Section 7.4 of the Area Development Agreement to fully understand the implications of termination or non-renewal and how it might affect their specific circumstances.