During the term of the Buona franchise agreement, can a franchisee divert business from the Franchised Business to a Competitive Business?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall use its best efforts to develop and promote the Franchised Business.
All Buona products must be sold by Franchisee only from the Approved Location.
Franchisee may not use other channels of distribution such as the internet, catalog sales, telemarketing or other direct marketing to make sales outside of and apart from the operation of the Franchised Business at the Approved Location without Franchisor's prior written consent, which may be withheld by Franchisor in its sole discretion.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, franchisees are required to focus their efforts on developing and promoting their franchised business. Specifically, all Buona products must be sold exclusively from the approved location. Franchisees are restricted from using alternative distribution channels like the internet, catalogs, or telemarketing for sales outside of the physical restaurant location, unless they obtain prior written consent from Buona. This consent can be withheld at Buona's discretion.
These restrictions ensure that franchisees dedicate their resources to their assigned location and uphold the brand's standards. By limiting sales to the approved location and controlling other distribution methods, Buona aims to maintain consistency and quality across all franchise units. This approach is common in franchising, as franchisors seek to protect their brand and prevent franchisees from diverting sales to other ventures that could undermine the established business.
These provisions in the Buona franchise agreement are designed to prevent franchisees from directly competing with their own Buona restaurant by diverting resources or sales to a separate business. While the FDD does not explicitly use the term "Competitive Business" in this section, the restrictions on sales channels and the requirement to focus on the franchised business effectively prevent franchisees from operating a competing business simultaneously. Franchisees should seek clarification from Buona regarding any potential conflicts of interest if they are considering other business ventures during the franchise term.