What are the obligations of the developer upon termination or non-renewal 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. |
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, the obligations of the developer upon termination or non-renewal of the Area Development Agreement (ADA) are limited. Specifically, the developer loses the right to develop any further Buona franchises under the ADA. However, the termination or non-renewal of the ADA does not impact or terminate any existing franchise agreements that the developer may have already entered into.
In practical terms, this means that if a developer's Area Development Agreement with Buona is terminated, they cannot open any new Buona restaurants within the designated development area. However, any Buona restaurants that the developer has already opened and are operating under separate franchise agreements can continue to operate as usual, provided they remain in compliance with their individual franchise agreements.
This provision protects the franchisee's existing investments and business operations, ensuring that termination of the ADA does not automatically lead to the closure of existing Buona restaurants. It also allows Buona to terminate an ADA without disrupting established franchise locations. Prospective developers should carefully consider the implications of this clause, particularly regarding their long-term development plans and the potential impact of termination on their overall investment strategy with Buona.