What are Buona's rights upon termination or expiration of the Development Agreement regarding establishing new Franchised Restaurants?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
te this Agreement and all rights granted hereunder to you without affording you any opportunity to cure the default effective immediately upon delivery to you of a written notice from us;
- (b) Reduce the number of Franchised Restaurants which you have the right to establish and open pursuant to this Agreement and reduce the corresponding Development Territory; or
- (c) Exercise any other rights and remedies which we may have under applicable law.
- 7.4 Upon termination or expiration of this Agreement, all remaining rights granted to you to establish and open Franchised Restaurants under this Agreement for which a Franchise Agreement has not been executed shall automatically be null and void. You shall have no right to establish, open or operate any Franchised Restaurants for which a Franchise Agreement has not been executed by us prior to the date of termination or expiration of this Agreement. Upon termination or expiration of this Agreement, we will have the right to establish ourselves or through an affiliate or grant to a third party the right to establish a Franchised Restaurant within the Development Territory as long as there is no violation of the territorial protections granted to you under existing individual Franchise Agreements.
- 7.5 No default under this Agreement shall constitute a default under any Franchise Agreement between the parties hereto. The terms and conditions of each Franchise Agreement must be complied with by you or your affiliate as franchisee thereunder and shall control in determining whether any default exists under such Franchise Agreement.
- 7.6 No right or remedy herein conferred upon or reserved to Franchisor is exclusive of any other right or remedy provided or permitted by law or equity.
8. TRANSFERABILITY; ENTITY AS DEVELOPER
- 8.1 This Agreement is fully assignable by us and will inure to the benefit of any assignee or other legal successor to the interest of the Franchisor herein.
- 8.2 You understand and acknowledge that the rights granted to you in this Agreement are personal to you and that we granted them in reliance upon the qualifications of you or your Owners. You and your Owners shall not, directly or indirectly sell, assign, transfer, convey, give away, pledge, mortgage or otherwise encumber any interest in this Agreement or in Developer to any third party, and nothing in this Agreement shall be construed as granting you the right to do so. Any purported assignment, sale or transfer by Developer or its Owners shall be null and void and shall constitute a material default hereunder. Any such purported assignment or transfer occurring by operation of law or otherwise, including any assignment by or to any trustee in bankruptcy, shall be a material default of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, upon termination or expiration of the Development Agreement, any rights the developer had to establish and open Buona Restaurants for which a Franchise Agreement has not been executed are automatically voided. The developer loses the right to establish, open, or operate any Buona Restaurants if a Franchise Agreement hasn't been executed by Buona before the termination or expiration date.
Buona retains the right to establish Franchised Restaurants themselves, through an affiliate, or by granting a third party the right to establish a Buona Restaurant within the Development Territory. This is permissible as long as it does not violate any territorial protections granted to the developer under existing individual Franchise Agreements.
Furthermore, after the completion of the Development Schedule and the termination of the developer's exclusive rights to the Development Area, the developer may have a right of first refusal. If Buona seeks to establish or license others to establish a Franchised Restaurant within the Development Area, they must first offer the developer the option to establish additional Franchised Restaurants under Buona's current terms and conditions. Buona will provide written notice with details, including a copy of the current Franchise Disclosure Document and Franchise Agreement. The developer then has thirty days to exercise this option by executing the necessary documents and paying the initial fee. Failure to do so forfeits their right to establish or operate the additional Buona Restaurant. However, Buona is not obligated to offer this right if arrangements with a third party, lease restrictions, or other circumstances prevent or restrict the developer from operating the additional Buona Restaurant or prevent Buona from offering the right of first refusal.