Is there an exception to the post-termination non-compete for ownership of publicly-traded securities related to a Buona franchise?

According to Buona's 2025 Franchise Disclosure Document, there is an exception to the post-termination non-compete agreement regarding the ownership of publicly-traded securities. Specifically, the document states that owning two percent (2%) or less of a publicly traded franchisor will not be prohibited under the post-termination covenants. This allowance provides a limited exception to the restrictions placed on a franchisee after the franchise agreement ends.

This exception means that a former Buona franchisee, after their franchise agreement concludes, can invest in the stock of a publicly traded competitor, provided that their ownership stake does not exceed 2%. This clause balances the franchisor's interest in preventing competition from former franchisees with the franchisee's ability to make personal investments. Without this exception, franchisees might be forced to divest even minor holdings in publicly traded companies that could be considered competitive, which could unduly restrict their investment options.

It is important to note that this exception applies only to ownership of publicly traded companies. The post-termination covenant still restricts the franchisee from owning, operating, or being involved in a competitive business in other ways, such as through a privately held company or directorship. The definition of a "Competitive Business" is any retail establishment that derives more than ten percent (10%) of its gross sales from Italian beef and Italian sausage products and other Italian specialties. Therefore, while a small investment in a publicly traded competitor is permitted, more substantial involvement in a competing business is not.