How does Buona satisfy its obligations when it reserves discretion in a particular area?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 1.3 Except as otherwise provided in this Agreement, and as long you are in compliance with the Development Schedule and otherwise in compliance with this Agreement, we shall not establish, nor license anyone other than Developer the right to establish any Buona Restaurant in the Development Area prior to the expiration of the Development Schedule set forth in Exhibit B. As an alternative to a contiguous Development Area in which all Franchised Restaurants will be developed, we may designate a separate Development Area for each Franchised Restaurant to be developed and each specified Development Area will expire according to the development deadlines for that particular Franchised Restaurant as set forth in Exhibit B. We (and any affiliate) reserve the right to:
- (a) distribute products and services which comprise, may in the future comprise or which do not comprise, a part of the System through any alternative distribution channels including, but not limited to, supermarkets and other retail facilities, wholesale sale, catalogs, direct marketing, the Internet or similar electronic media, using the Marks ("Alternate Distribution Channels");
- (b) establish businesses which are franchised, licensed or owned by Franchisor or any affiliate at any locations Franchisor deems appropriate or distribute products or services which are similar to the products and services offered under the System under trade names, trademarks, service marks, trade dress or other commercial symbols other than the Marks.
- (c) to acquire or be acquired by a Franchisor establishing businesses identical or similar to the Buona Restaurant, even if the other business operates, franchises, and/or licenses competitive businesses anywhere, including the Protected Area; and
- (d) to implement and maintain multi-area marketing programs at any time, including internet and regional or national accounts. Franchisor reserves the right to establish mandatory policies and procedures for these multi-area marketing programs; and
- (e) to engage in any other business activities not expressly prohibited by this Agreement.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, Buona reserves certain rights regarding distribution channels and locations, even within a franchisee's protected area. Specifically, Buona retains the right to distribute products through alternative channels like supermarkets, wholesale, catalogs, direct marketing, and the internet, using the brand's marks. This means that even if a franchisee has a protected area, Buona can still sell its products through these other avenues, potentially competing with the franchisee's business.
Buona also reserves the right to establish businesses, whether franchised, licensed, or owned by Buona or its affiliates, at locations Buona deems appropriate. Additionally, Buona can distribute products similar to those offered under the Buona system using different trade names or trademarks. This allows Buona to operate or franchise competing businesses, even within a franchisee's protected area, as long as they don't use the Buona name and marks.
Furthermore, Buona can acquire or be acquired by another franchisor that operates similar businesses, even if those businesses compete with Buona restaurants within the protected area. Buona also has the right to implement and maintain multi-area marketing programs, including internet and regional or national accounts, and can establish mandatory policies and procedures for these programs. Finally, Buona reserves the right to engage in any other business activities not expressly prohibited by the franchise agreement. These reservations of rights provide Buona with significant flexibility in how it operates and expands its brand, even within areas where franchisees have been granted some level of protection.
For a prospective franchisee, this means that while you may be granted a protected area, Buona retains considerable power to operate and distribute its products through other channels and brands, potentially creating competition within your territory. It is important to understand the scope of these reserved rights and how they might impact your business before investing in a Buona franchise.