Under what conditions are Buona's decisions or actions deemed to be the result of reasonable business judgment?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor's decisions or actions will be deemed to be the result of reasonable business judgment, even if other reasonable or even
arguably preferable alternatives are available, if Franchisor's decision or action is intended, in whole or significant part, to promote or benefit the System and Franchised Businesses generally, even if the decision or action also promotes Franchisor's financial or other individual interest. Examples of items that will promote or benefit all Franchised Businesses and the System include but are not limited to enhancing the value of the Marks, improving customer service and satisfaction, improving product quality, improving uniformity, enhancing or encouraging modernization and improving the competitive position of the System.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, Buona's decisions or actions are considered to be the result of reasonable business judgment if they are intended, in whole or significant part, to promote or benefit the Buona system and franchised businesses generally. This holds true even if other reasonable or arguably preferable alternatives exist, and even if the decision or action also promotes Buona's financial or other individual interests.
Examples of actions that would promote or benefit all franchised businesses and the Buona system include enhancing the value of the Marks, improving customer service and satisfaction, improving product quality, improving uniformity, encouraging modernization, and improving the competitive position of the system. This means that Buona has broad discretion in making decisions that it believes will benefit the overall franchise system, even if those decisions also benefit the company directly.
This clause is important for prospective franchisees because it clarifies the extent to which Buona can make changes to the system. While franchisees may not always agree with every decision, this clause suggests that as long as the decision is intended to benefit the system as a whole, it will be considered a reasonable exercise of business judgment. Franchisees should be aware that Buona may modify the system to adapt to changes in technology, market conditions, and consumer trends, and franchisees are expected to comply with these changes.