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

According to Buona's 2025 Franchise Disclosure Document, the post-termination non-compete restriction does not apply to the ownership of a small percentage of shares in a publicly-traded security. Specifically, the restriction does not apply if the ownership is less than 2% of the outstanding shares of a publicly-traded security. This means a former Buona franchisee, after the termination or expiration of their franchise agreement, can own a limited amount of stock in a publicly-traded competitor without violating the non-compete agreement.

This exception provides some flexibility for franchisees who may want to invest in publicly-traded companies, even if those companies are considered competitive businesses. However, it's important to note that this exception is limited to ownership of less than 2% of the outstanding shares. Any ownership exceeding this threshold would be subject to the standard non-compete restrictions. The non-compete agreement generally restricts the franchisee from having any ownership interest in, maintaining, operating, or being involved with a competitive business within a 10-mile radius of their former Buona location or any other Buona location.

It is important for prospective Buona franchisees to understand the specific terms and limitations of the non-compete agreement, including this exception for publicly-traded securities. Franchisees should consult with legal counsel to ensure they fully understand their obligations and rights under the franchise agreement, especially regarding post-termination activities and investments.