What is Buona's requirement regarding transfer restrictions on securities with voting rights for the franchisee's entity?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 15.2 Transfer by Franchisee.
Franchisee understands and acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee, and that Franchisor has granted this Agreement in reliance on Franchisee's business skills and financial capacity.
Accordingly, neither (i) Franchisee, nor (ii) any immediate or remote successor to Franchisee, nor (iii) any individual or any Entity which directly or indirectly owns any interest in Franchisee or in this Agreement, shall sell, assign, transfer, convey, donate, pledge, mortgage, or otherwise encumber any direct or indirect interest in (i) this Agreement, (ii) Franchisee, or (iii) a substantial portion of the assets of the Franchised Business without the prior written consent of Franchisor.
Acceptance by Franchisor of any royalty fee, marketing fund contributions or any other amount accruing hereunder from any third party, including but not limited to any proposed transferee, shall not constitute Franchisor's approval of such party as a transferee or the transfer of this Agreement to such party.
Any purported assignment or transfer, by operation of law or otherwise, not having the written consent of Franchisor, shall be null and void, and shall constitute a material breach of this Agreement, for which Franchisor may then terminate without opportunity to cure pursuant to Section 16.2(f) of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, franchisees face restrictions on transferring any direct or indirect interest in the franchise agreement, the franchisee entity, or a substantial portion of the franchised business's assets without prior written consent from Buona. This encompasses selling, assigning, transferring, conveying, donating, pledging, mortgaging, or otherwise encumbering such interests.
Buona emphasizes that the rights and duties within the franchise agreement are personal to the franchisee, and the agreement was granted based on the franchisee's business skills and financial capacity. Consequently, any transfer by the franchisee, their successors, or any entity owning an interest in the franchisee requires Buona's approval. Accepting payments from a third party does not automatically constitute approval of a transfer.
Any transfer without Buona's written consent is considered null and void, constituting a material breach of the agreement. This breach allows Buona to terminate the agreement without providing an opportunity to cure the breach. This stringent control over transfers ensures that Buona maintains oversight over who operates its franchises and protects the brand's integrity.