Under what circumstances can the Buona franchisor terminate the Development Agreement immediately without opportunity to cure?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
usiness or (2) hire any employees of ours or our affiliates.
7. DEFAULT AND TERMINATION
- 7.1 The right to open Buona Restaurants has been granted in reliance on your representations and warranties, and strictly on the conditions set forth in this Development Agreement including, without limitation, the condition that you comply strictly with the Development Schedule.
- 7.2 You shall be in default under this Agreement, and all rights granted herein to you shall automatically terminate without notice or an opportunity to cure if:
- (a) you are adjudicated bankrupt, become insolvent, commits any affirmative action of insolvency or files any action or petition of insolvency, or if a receiver (permanent or temporary) of your property or any part thereof is appointed by a court of competent authority, or if you make a general assignment for the benefit of its creditors;
- (b) if a final judgment against your business assets remains unsatisfied of record for thirty (30) days or longer (unless supersedeas bond is filed);
- (c) if execution is levied against your business or property;
- (d) if suit to foreclose any lien or mortgage against Developer's premises or business assets is instituted against you and not dismissed within thirty (30) days, or is not in the process of being dismissed; provided, however, that Franchisor reserves the right to be named as trustee or receiver in any voluntary petition for bankruptcy or insolvency filed by you;
- (e) upon the dissolution of the entity that is Developer is dissolved, or upon the death of one or more of your Owners;
(f) Developer or any of its shareholders, members, managers, partners, officers, directors
| ADA 2025 | - 6 - | |
|---|---|---|
| FRANCHISOR INITIALS | DEVELOPER INITIALS |
or guarantors, is indicted for, convicted of, or pleads guilty to a felony, a crime involving moral turpitude, or any other crime or offense that Franchisor believes is reasonably likely to have an adverse effect on the System, the Marks, or the goodwill associated with the System and the Marks, or Franchisor's interest in the System or the Marks;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, there are several circumstances under which the Development Agreement can be terminated immediately without an opportunity to cure. These involve financial instability, legal issues, and misconduct.
Specifically, Buona can terminate the agreement immediately if the developer is adjudicated bankrupt, becomes insolvent, takes action of insolvency, files an action or petition of insolvency, or has a receiver appointed for their property. Immediate termination also occurs if a final judgment against the developer's business assets remains unsatisfied for 30 days or longer, if execution is levied against the business or property, or if a suit to foreclose any lien or mortgage against the developer is instituted and not dismissed within 30 days. The agreement can also be terminated without notice if the entity that is the developer dissolves, or upon the death of one or more of the owners.
Additionally, Buona can terminate the agreement immediately if the developer, or any of its shareholders, members, managers, partners, officers, or directors, is indicted for, convicted of, or pleads guilty to a felony, a crime involving moral turpitude, or any other crime or offense that Buona believes is reasonably likely to have an adverse effect on the system. The agreement can also be terminated if any of those individuals verbally or physically assaults or abuses any officer, director, member, manager, or employee of Buona or any of its affiliates, or any Buona franchisee or employees of franchisees, after receiving a warning from Buona regarding this conduct. Furthermore, if any other agreement between the franchisee (or any affiliate) and Buona (or its affiliates) is terminated due to a default by the franchisee (or any affiliate), Buona can elect to terminate the Development Agreement immediately.
These terms highlight the importance of maintaining financial stability, adhering to legal and ethical standards, and fostering respectful relationships with Buona and its affiliates to avoid immediate termination of the Development Agreement. A prospective franchisee should carefully consider these conditions and ensure they have the resources and commitment to meet these obligations.