Is Secured Party's consent required if a Buona franchisee transfers control of the Franchised Business?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) if Debtor abandons, surrenders or transfers control of the operation of the Franchised Business without Secured Party's prior written consent; or
- (e) if Debtor is a corporation, limited liability company, partnership, joint venture or other legal entity, any action is taken which purports to merge, consolidate, dissolve or liquidate Debtor without the prior written consent of Secured Party.
- 3.2. Remedies. Upon the occurrence of an Event of Default, all amounts payable to Secured Party shall become immediately due and payable and Secured Party shall have all the rights and remedies of a secured party under the Uniform Commercial Code as in effect in the state or states in which the Collateral may be located, including, but not limited to, the right to enter upon the Franchised Restaurant peaceably and remove all Collateral. Secured Party shall give Debtor reasonable notice of the time and place of any public or private sale or other intended disposition of all or any particular Collateral, as the case may be. Debtor agrees that the requirement of reasonable notice shall be met if notice is mailed to Debtor at its address first above written not less than five (5) business days prior to the sale or other disposition. Expenses of retaking, holding, preparing for sale, selling or the like, shall include, without limitation, Secured Party's reasonable attorneys' fees and other legal expenses. Secured Party's rights and remedies, whether pursuant hereto or pursuant to the Illinois Uniform Commercial Code or any other statute or rule of law conferring rights similar to those conferred by the Illinois Uniform Commercial Code, shall be cumulative and not alternative.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, if a franchisee (Debtor) transfers control of the operation of their franchised business, they must obtain prior written consent from the Secured Party (Buona). If the franchisee fails to do so, it constitutes an event of default.
In the event of default due to unauthorized transfer, all amounts payable to the Secured Party become immediately due. The Secured Party has all the rights and remedies of a secured party under the Uniform Commercial Code, including the right to enter the Buona Restaurant and remove collateral. The Secured Party must provide reasonable notice of any sale or disposition of collateral, which is satisfied if notice is mailed to the Debtor at least five business days prior to the action.
This requirement protects Buona's interest in the franchise and ensures that the brand maintains control over who operates its locations. It also allows Buona to take swift action to recover any outstanding debts and repossess assets if a franchisee violates the agreement by transferring control without permission. Prospective franchisees should be aware of this condition and ensure they obtain proper consent before making any changes to the control or operation of their Buona franchise.