Can the then-current Buona Franchise Agreement contain new or significantly different terms for a transferee?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
The transferee shall execute, at Franchisor's option, (i) written assignment, in form satisfactory to Franchisor, pursuant to which the transferee shall assume all of the obligations of Franchisee under this Agreement and any other agreement relating to the Franchised Business to be transferred; or (ii) Franchisor's then-current form of dual brand Franchise Agreement and such other then-current ancillary agreements as Franchisor may reasonably require.
The then-current form of the Franchise Agreement may contain new or significantly different terms, including but not limited to a higher royalty fee and advertising fund contribution and less territorial protection than contained in this Agreement.
The then-current form of the Franchise Agreement will expire on the expiration date of this Agreement and will contain the same renewal rights, if any, as are available to Franchisee under this Agreement;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, a transferee—someone who is taking over an existing franchise—may be subject to the terms of Buona's then-current Franchise Agreement, which could differ significantly from the original agreement. This means that when a franchisee sells their Buona franchise, the buyer might have to agree to new terms.
The updated agreement could include less territorial protection, as well as higher royalty fees and advertising fund contributions. The then-current form of the Franchise Agreement will expire on the expiration date of the original agreement and will contain the same renewal rights, if any, as are available to the original franchisee under the original agreement.
This has significant implications for both the seller and the buyer. The seller needs to be aware that the value of their franchise could be affected by these potential changes, as a buyer might be less willing to pay a premium for a franchise with less favorable terms. The buyer needs to carefully review the then-current Franchise Agreement to understand the full scope of their obligations and costs, which may be higher than what the original franchisee was paying. It is important for prospective franchisees to consult with a legal professional to fully understand the implications of these terms before transferring a franchise.