Can Buona transfer its interest in the Franchise Agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
hereunder and sends Franchisee written notice of the assignment so attesting, Franchisor will have no further obligation under this Agreement, and Franchisee agrees promptly to execute a general release of Franchisor and its Affiliates, from claims or liabilities of Franchisor under this Agreement.
- 15.2 Transfer by Franchisee. Franchisee understands and acknowledges that the rights and duties set forth in this Agreement are personal to Franchisee, and that Franchisor has granted this Agreement in reliance on Franchisee's business skills and financial capacity. Accordingly, neither (i) Franchisee, nor (ii) any immediate or remote successor to Franchisee, nor (iii) any individual or any Entity which directly or indirectly owns any interest in Franchisee or in this Agreement, shall sell, assign, transfer, convey, donate, pledge, mortgage, or otherwise encumber any direct or indirect interest in (i) this Agreement, (ii) Franchisee, or (iii) a substantial portion of the assets of the Franchised Business without the prior written consent of Franchisor. Acceptance by Franchisor of any royalty fee, marketing fund contributions or any other amount accruing hereunder from any third party, including but not limited to any proposed transferee, shall not constitute Franchisor's approval of such party as a transferee or the transfer of this Agreement to such party. Any purported assignment or transfer, by operation of law or otherwise, not having the written consent of Franchisor, shall be null and void, and shall constitute a material breach of this Agreement, for which Franchisor may then terminate without opportunity to cure pursuant to Section 16.2(f) of this Agreement.
- 15.3 Conditions of Consent. Franchisor shall not unreasonably withhold its written approval of a transfer, provided Franchisee and the assignee or transferee have met all of the following conditions as determined by Franchisor in its sole discretion:
- (a) Franchisee shall not be in default under this Agreement or any agreement with Franchisor and its Affiliates at the time Franchisee requests the right to transfer the franchise or at the time the Franchised Business is to actually be transferred. All accounts payable and other monetary obligations to Franchisor and its Affiliates shall be paid in full;
- (b) Franchisee shall have agreed to remain obligated under the covenants contained in Article XIV hereof as if this Agreement had been terminated on the date of the transfer;
- (c) The transferee must be of good moral character and reputation, in the reasonable judgment of Franchisor;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the franchisee's rights and duties are personal, and Buona grants the agreement based on the franchisee's business skills and financial capacity. The franchisee cannot sell, assign, transfer, convey, donate, pledge, mortgage, or encumber any direct or indirect interest in the agreement. This restriction applies to the franchisee, their successors, and any entity owning an interest in the franchisee or the agreement.
However, the FDD states that transfers can occur through devise or inheritance, subject to the same conditions as any inter vivos transfer. If the heirs or beneficiaries cannot meet the standard conditions, the personal representative has up to twelve months from the franchisee's death to sell or transfer the interest, subject to all transfer terms in the agreement. If the interest is not transferred within this period, Buona may terminate the agreement.
Upon the franchisee's request, Buona may, at its discretion, take over the operation of the franchised business until the franchisee's interest is transferred. If Buona operates the business, the franchisee must pay Buona's published fee for such management service, plus all associated expenses. This ensures that even in cases of transfer by devise or inheritance, Buona maintains control over the brand and operation standards, while providing a limited time for the franchisee's estate to find a suitable buyer or assignee who meets Buona's criteria.