Does the post-termination non-compete restriction for Buona apply to the location of any other Buona Business?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee covenants that Franchisee and any of its shareholders, officers, directors, members, managers, partners and guarantors, either directly or indirectly, for itself or themselves or on behalf of, or in conjunction with, any other person or entity, regardless of the cause for termination shall not:
- (a) For a period of two (2) years following the expiration or termination of this Agreement, have any ownership interest in, maintain, operate, engage in, serve as a director, officer, manager, employee, consultant or representative of, grant a franchise to, advise, help, make loans to, lease property to, or have any interest in, directly or indirectly, a Competitive Business that is located within a radius of ten (10) miles of (i) the location specified in the Approved Site Location Addendum as described in Article I or (ii) the location of any other Buona Business, whether owned by Franchisor or any other Buona franchisee, in existence as of the date of expiration or termination of this Agreement.
This restriction will not apply to the ownership of less than 2% of the outstanding shares of a publicly-traded security.
Franchisee and its officers, directors, shareholders, managers, members, partners and guarantors expressly acknowledge that they possess skills and abilities of a general nature and have other opportunities for exploiting those skills.
As a result, adherence to this restriction will not deprive them of their personal goodwill or ability to earn a living.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the post-termination non-compete agreement does extend to the location of other Buona businesses. The agreement states that for two years after the franchise agreement ends, the franchisee cannot have any involvement with a competitive business within a 10-mile radius of either their original Buona location or any other Buona Business. This applies regardless of whether the other Buona location is owned by Buona itself or another franchisee and if that location was in existence when the franchise agreement ended.
This restriction impacts a franchisee's options after leaving the Buona system. The franchisee and related parties (shareholders, officers, etc.) are barred from engaging with a competing business within the specified radius. This could limit their ability to start a similar restaurant or work for a competitor in the area. The FDD does state that this restriction does not apply to the ownership of less than 2% of the outstanding shares of a publicly-traded security.
Buona seeks to protect its market presence and brand recognition by implementing these non-compete restrictions. By preventing former franchisees from opening competing businesses nearby, Buona aims to reduce the risk of losing customers to similar establishments that might capitalize on Buona's brand recognition or operational model. This measure is designed to maintain the integrity and exclusivity of the Buona brand within specific geographic areas.
It is important to note that the franchisee acknowledges possessing general skills and abilities and having other opportunities to earn a living. This acknowledgement is included in the agreement to support the enforceability of the non-compete clause, suggesting that adhering to the restriction will not deprive them of their personal goodwill or ability to earn a living. Franchisees should carefully consider the implications of this restriction before entering into a franchise agreement with Buona.