After termination of the Buona franchise agreement, can a former franchisee advise a Competitive Business within the restricted radius?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee covenants that Franchisee and any of its shareholders, officers, directors, members, managers, partners and guarantors, either directly or indirectly, for itself or themselves or on behalf of, or in conjunction with, any other person or entity, regardless of the cause for termination shall not:
- (a) For a period of two (2) years following the expiration or termination of this Agreement, have any ownership interest in, maintain, operate, engage in, serve as a director, officer, manager, employee, consultant or representative of, grant a franchise to, advise, help, make loans to, lease property to, or have any interest in, directly or indirectly, a Competitive Business that is located within a radius of ten (10) miles of (i) the location specified in the Approved Site Location Addendum as described in Article I or (ii) the location of any other Buona Business, whether owned by Franchisor or any other Buona franchisee, in existence as of the date of expiration or termination of this Agreement.
This restriction will not apply to the ownership of less than 2% of the outstanding shares of a publicly-traded security.
Franchisee and its officers, directors, shareholders, managers, members, partners and guarantors expressly acknowledge that they possess skills and abilities of a general nature and have other opportunities for exploiting those skills.
As a result, adherence to this restriction will not deprive them of their personal goodwill or ability to earn a living.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, a former franchisee is restricted from advising a Competitive Business within a specific radius for a certain period after the termination or expiration of the franchise agreement. Specifically, the franchisee (including its shareholders, officers, directors, members, managers, partners, and guarantors) cannot, either directly or indirectly, advise a Competitive Business. This restriction applies for two years following the termination or expiration of the agreement.
The restricted radius extends ten miles from either the location specified in the Approved Site Location Addendum or the location of any other Buona Business. This includes locations owned by Buona itself or by any other Buona franchisee, provided those locations existed as of the date of termination or expiration.
This restriction does not apply if the ownership interest in a publicly-traded security is less than 2%. The FDD states that Buona believes this restriction will not deprive franchisees of their personal goodwill or ability to earn a living, as they possess general skills and abilities and have other opportunities to use those skills.