When transferring a Buona franchise, can Buona require the transferee to execute the then-current form of the Buona Franchise Agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- (f) 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) the then-current form of Buona 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 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, when transferring a franchise, Buona has the option to require the transferee to execute either a written assignment assuming the franchisee's obligations or the then-current form of the Buona Franchise Agreement. This decision is at Buona's discretion.
The then-current form of the Franchise Agreement may include terms that are new or significantly different from the original agreement. These differences can include, but are not limited to, higher royalty fees, increased advertising fund contributions, and reduced territorial protection compared to the original agreement. This means a transferee could face more stringent financial and operational requirements than the original franchisee.
Despite these potential changes, the then-current form of the Franchise Agreement will expire on the same date as the original agreement and will offer the same renewal rights, if any, that were available to the original franchisee. This ensures that the transferee's term and renewal options align with the initial agreement, regardless of any interim changes to the standard franchise terms. Prospective franchisees should carefully consider these factors and understand the potential implications of a transfer on the terms of their franchise agreement.