What does Buona have the option to purchase from a franchisee upon expiration or termination of the franchise agreement, according to Section 17.2?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| unless it was renovated within the last 5 years prior to the transfer; the new franchisee's organizational documents (i.e. operating agreement or bylaws) provide that further assignments or transfers are subject to the Franchise Agreement; you execute a guaranty for the new franchisee's obligations under your Franchise Agreement, as requested by us; and you obtain an assignment of the current lease or a new lease for existing premises of the Buona Business for a lease term (including renewal terms) equal to the franchise term. (See also s. below.) | ||
| o. | Section 15.9 | We can match any bona fide written offer from a |
| Our right of first refusal to | qualified third party for all or any part of your | |
| acquire your business | Buona Businesses. | |
| p. Our option to purchase your business | Section 17.2 | Upon expiration or termination, we have the right to purchase improvements, furniture, fixtures, equipment, advertising and promotional materials, ingredients, products, materials, supplies, paper goods and any items bearing our Marks at the then-current fair market value, but specifically excluding any value for goodwill or going concern value. If you and us cannot agree on a fair market value within a reasonable time, an independent appraiser shall be designated by us, and his/her determination of fair market value shall be binding. |
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 17.2 of the franchise agreement grants Buona the option to purchase certain assets from a franchisee upon the expiration or termination of the franchise agreement. Specifically, Buona has the right to purchase improvements, furniture, fixtures, equipment, advertising and promotional materials, ingredients, products, materials, supplies, paper goods, and any items bearing Buona's Marks.
The purchase price for these items will be the then-current fair market value. However, the fair market value specifically excludes any value attributed to goodwill or the going concern value of the business. This means that Buona will only pay for the tangible assets and not for the brand recognition or established customer base of the franchise location.
In the event that Buona and the franchisee cannot agree on a fair market value within a reasonable timeframe, an independent appraiser will be designated by Buona to determine the fair market value. The appraiser's determination will be binding on both parties. This process ensures an objective valuation of the assets, although the franchisee has no say in who the appraiser is. This is a fairly standard clause in franchise agreements to ensure a smooth transition upon termination or expiration, but it's important for franchisees to understand how the value of their business will be assessed in such a scenario.