For what reasons can Buona terminate the franchise agreement if the franchisee ceases to operate the business?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
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- (b) If this Agreement is terminated as a result of a default by Franchisee (or any affiliate of Franchisee), Franchisor or its Affiliates may, at their option, elect to terminate any or all other agreements between Franchisee (or an affiliate of Franchisee) and Franchisor or its Affiliates. If any other agreement between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates is terminated as a result of a default by Franchisee (or any affiliate of Franchisee), Franchisor may, at its option, elect to terminate this Agreement. It is agreed that an incurable or uncured default under this Agreement or any other agreement between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates will be grounds for termination of this Agreement and/or all agreements between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates without additional notice or opportunity to cure.
- 16.6 Arrearage Agreement. Notwithstanding anything to the contrary set forth in this Agreement, Franchisee hereby acknowledges that any agreement between Franchisee and Franchisor or its Affiliates relating to past due amounts accruing hereunder (an "Arrearage Agreement"), including but not limited to any promissory note, payment plan or amendment to this Agreement shall be deemed to be a material part of this Agreement and shall be incorporated herein by reference. A default under any Arrearage Agreement shall be deemed a material default of this Agreement, regardless of the reason Franchisee fails to pay the amount that is the subject of an Arrearage Agreement. This provision does not require Franchisor to waive any payments due from Franchisee or to enter into any Arrearage Agreement.
- 16.7 Statutory Cure Period. If a default is curable under this Agreement, and the applicable law in the state in which the Franchised Business is located requires a longer cure period than that
specified in this Agreement, the longer period will apply.
- 16.8 Right to Operate Upon Default**.** In addition to Franchisor' right to terminate this Agreement and not in lieu of such right or any other rights, in the event that Franchisee has not cured a default under this Agreement within fourteen (14) days after receipt of a written notice of default, Franchisor may, at its option, enter upon the Premises and exercise complete authority with respect to the operation of the Franchised Business until such time as Franchisor determines that the default has been cured and that there is compliance with the requirements of this Agreement. Franchisee acknowledges and agrees that Franchisor's agent or other representative designated by Franchisor may take over, control and operate the Franchised Business, that Franchisee shall pay Franchisor the then-current published fee for such management service, plus all travel expenses, room and board and other expenses reasonably incurred by such agent or representative so long as it shall be required to enforce compliance with this Agreement. Franchisee further acknowledges that if Franchisor temporarily operates the Franchised Business on Franchisee's behalf under this Paragraph 16.8, Franchisee will indemnify and hold harmless Franchisor and Franchisor's agent or representative respecting any and all claims arising out of Franchisor's operation of the Franchised Business under this Paragraph 16.8.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, several actions or inactions can lead to the termination of the franchise agreement. These include failing to meet deadlines in the development schedule, not complying with the agreement's terms, attempting unauthorized transfers of the agreement, or defaulting on any agreement with Buona or its affiliates. If any of these defaults occur, Buona has the right to terminate the agreement immediately upon written notice, reduce the number of restaurants the franchisee can open, or pursue other legal remedies.
Additionally, if any other agreement between the franchisee (or their affiliate) and Buona (or its affiliates) is terminated due to the franchisee's default, Buona can choose to terminate the franchise agreement. A default under any Arrearage Agreement (an agreement related to past due amounts) is considered a material default of the franchise agreement, regardless of the reason for non-payment. However, Buona is not obligated to offer any Arrearage Agreement.
Upon termination of the agreement, the franchisee must immediately cease operating as a Buona franchisee and cannot represent their business as such. They must also stop using Buona's menus, recipes, trademarks, and other proprietary information. If the franchisee continues to operate a restaurant, they must remove all branding and features that identify it as a former Buona location to avoid confusion. These post-termination obligations are designed to protect Buona's brand and system standards.