After termination of the Buona franchise agreement, what is the geographic radius within which the franchisee is restricted from engaging in a Competitive Business?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
us that you are entering into this Agreement with the intention of complying with its terms and conditions through the term of this Agreement and not for the purpose of resale of the developmental rights hereunder.
9. POST-TERMINATION COVENANTS
- 9.1 Unless otherwise specified, the term "Developer" as used in this Section 9 shall include each and every Owner of Developer.
- 9.2 Developer specifically acknowledges that, pursuant to this Agreement, Developer will have access to the Confidential Information. Accordingly, Developer covenants that Developer and its Owners shall not, for a period of two (2) years after the expiration or termination of this Agreement, regardless of the cause of termination, either directly or indirectly, for itself, or through, on behalf of, or in conjunction with any person, persons, or entity:
- (a) own, maintain, operate, engage in, consult with or have any interest in (as disclosed or beneficial owner) any Competitive Business or any entity which is franchises, licenses or develops Competitive Businesses within the Development Area, or within a ten (10) mile radius of any existing Buona Restaurant, except under a validly existing Franchise Agreement with Franchisor. You acknowledge and agree that, after the date of this Agreement, other Buona Restaurants may open, thereby expanding the geographical area in which you will not be able to compete with us.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, after the franchise agreement is terminated, a franchisee is restricted from engaging in a Competitive Business within a specific geographic radius. This restriction lasts for two years following the termination or expiration of the agreement, regardless of the reason for termination.
The restricted area extends to a ten-mile radius of any existing Buona Restaurant. The term 'Competitive Business' is defined as any retail establishment that derives more than ten percent of its gross sales from Italian beef and Italian sausage products and other Italian specialties. This means a former franchisee cannot own, operate, or have any interest in such a business within that ten-mile radius, except under a valid franchise agreement with Buona.
This non-compete clause also acknowledges that new Buona restaurants may open after the agreement date, which could expand the geographical area where the franchisee is restricted from competing. This condition highlights the importance of carefully considering the potential future growth of the Buona franchise system when evaluating the non-compete obligations. The agreement specifies that the term 'Developer' includes each and every Owner of Developer.