What is the relationship between the term of the lease and the term of the Franchise Agreement for a Buona franchise location?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Any letter of intent for a lease for the premises of the Buona Business and any proposed lease for the premises of the Buona Business must be approved by Franchisor before it is executed by Franchisee.
Franchisor may, in its discretion, require that the letter of intent and the lease contain commercially reasonable terms based on current market conditions and that certain terms and provisions be included in the letter of intent and the lease.
Franchisor's approval of the lease shall also be conditioned upon the landlord's execution of the Addendum to Lease and Collateral Assignment attached hereto as Exhibit B, or inclusion in the lease of the same or similar terms as approved by Franchisor.
The requirements set forth herein apply whether the lessor is an unrelated third party or is an affiliate of Franchisee.
Once executed, Franchisee will provide Franchisor with a fully signed copy of the complete lease for the premises of the Franchised Business.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Buona requires franchisee leases to be approved by the franchisor. Specifically, any letter of intent or proposed lease must be approved before the franchisee executes it. Buona may also require that the lease contain commercially reasonable terms based on current market conditions, as well as specific terms and provisions. The franchisor's approval is conditional on the landlord signing an Addendum to Lease and Collateral Assignment, or including similar terms in the lease as approved by Buona. These requirements apply whether the lessor is a third party or an affiliate of the franchisee. Once the lease is signed, the franchisee must provide Buona with a fully signed copy.
Buona retains specific rights regarding the lease, including the right to enter the premises for modifications to protect their proprietary marks. Any retail radius restrictions in the lease cannot be binding or enforceable against Buona. The franchisee has the right to assign the lease to Buona or another franchisee during the lease term, including extensions or renewals, without the lessor's consent, through a Collateral Assignment. However, the assignment is not effective until Buona provides written notice of acceptance, and Buona is not liable unless it accepts the assignment in writing. The franchisee remains liable under the lease terms even after assignment, and Buona can reassign the lease to another franchisee without the lessor's consent.
While the FDD excerpt details Buona's requirements and involvement in the lease agreement, it does not explicitly state how the lease term and Franchise Agreement term are related. A prospective franchisee should seek clarification from Buona regarding whether the lease term must match the Franchise Agreement term, or if there is flexibility in the lease duration. Understanding this relationship is crucial for long-term planning and investment decisions.