After the termination of the Buona franchise agreement, what is the geographic radius within which franchisees are restricted from operating a Competitive Business?
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 franchisee is restricted from involvement with a Competitive Business within a specific geographic radius for two years after the termination or expiration of the franchise agreement. This restriction applies to the franchisee and any of its shareholders, officers, directors, members, managers, partners, and guarantors.
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 businesses owned by Buona itself or other Buona franchisees that existed as of the termination or expiration date of the agreement. The definition of what constitutes a Competitive Business is detailed in the FDD, which franchisees should review carefully.
However, there is an exception to this restriction: owning less than 2% of the outstanding shares of a publicly-traded security is permitted. Buona emphasizes that this restriction is not intended to deprive individuals of their ability to earn a living, as they possess general skills and abilities applicable to other opportunities. Franchisees and related parties acknowledge this when agreeing to the non-compete terms.
It is important for prospective franchisees to fully understand the scope and implications of this non-compete clause, including the definition of 'Competitive Business' and the potential impact on future business ventures after leaving the Buona franchise system. Franchisees should consult with legal counsel to assess the enforceability and practical effects of these restrictions in their specific circumstances.