What rights does Buona Franchisor retain in Captive Locations within the Buona Protected Area?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
The provisions of Section 1.3 shall not apply if the Franchised Business is operated in any of the following types of locations and/or with respect to such locations within the Buona Protected Area ("Captive Locations"), at which Franchisor retains the right, in its sole discretion, to franchise and/or operate Franchised Businesses, and to distribute by any means products and services of the System:
(a) Transportation facilities (including but not limited to airports, train stations, bus stations, etc.);
(b) Educational facilities (including but not limited to schools, colleges and universities);
(c) Institutional feeding facilities (including but not limited to hospitals, hotels, and corporate or school cafeterias);
(d) Government institutions and facilities such as military bases;
(e) Enclosed shopping malls;
(f) Entertainment venues, including casinos;
(g) Sports stadiums; and
(h) Amusement and/or theme parks.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the franchisor retains significant rights within a franchisee's protected area, specifically in what are termed "Captive Locations." These locations include transportation facilities like airports and train stations, educational facilities such as schools and universities, institutional feeding facilities like hospitals and corporate cafeterias, government institutions including military bases, enclosed shopping malls, entertainment venues including casinos, sports stadiums, and amusement or theme parks.
Buona reserves the right to franchise or operate businesses, and distribute products and services of the Buona system through any means within these Captive Locations, even if they fall within a franchisee's protected area. This means that while a franchisee may have a protected area, Buona can still establish a presence in these specific types of locations within that area without the franchisee's consent.
This reservation of rights has important implications for prospective franchisees. It means that the protected area granted to a franchisee is not absolute, and Buona can compete directly within that area in Captive Locations. A prospective franchisee should carefully consider the presence and potential impact of these Captive Locations when evaluating the potential of a specific territory. It would be prudent to investigate the number and type of Captive Locations within a proposed protected area to assess the potential for competition from Buona itself.