Can Buona terminate the agreement if a shareholder of the franchisee is convicted of a crime?

According to Buona's 2025 Franchise Disclosure Document, Buona can terminate the franchise agreement if a shareholder of the franchisee is convicted of certain crimes. Specifically, Buona can terminate the agreement if any of the franchisee's shareholders are indicted for, convicted of, or plead guilty to a felony, a crime involving moral turpitude, or any other crime or offense that Buona believes is reasonably likely to have an adverse effect on the Buona system, the brand's trademarks, or the associated goodwill. This also applies to Buona's interest in the system or the marks.

This provision gives Buona broad discretion to terminate the agreement based on a criminal conviction of a shareholder, even if the crime is not directly related to the operation of the franchise. The key factor is whether Buona believes the crime could negatively impact the brand's reputation or financial interests. This clause is relatively common in franchise agreements, as franchisors seek to protect their brand from negative publicity or association with criminal activity.

For a prospective Buona franchisee, this means that the criminal history of any shareholder in the franchise entity could potentially jeopardize the franchise agreement. It is important for all shareholders to be aware of this provision and to ensure that their conduct does not expose the franchise to the risk of termination. Franchisees should seek legal counsel to fully understand the implications of this clause and to assess the potential risks associated with the criminal backgrounds of their shareholders.