Under what conditions are the Buona franchisor's decisions deemed to be the result of reasonable business judgment?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 25.7 Franchisor's Reasonable Business Judgment.
Whenever Franchisor reserves discretion in a particular area or where Franchisor agrees to exercise its rights reasonably, in good faith or as it deems necessary or advisable, Franchisor will satisfy its obligations whenever Franchisor exercises reasonable business judgment in making its decision or exercising its rights.
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 Buona 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 Buona 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 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, Buona's decisions are considered to be the result of reasonable business judgment when the franchisor exercises its rights reasonably, in good faith, or as it deems necessary or advisable. This means that even if there are other reasonable or arguably better options available, Buona's decisions are still considered valid if they are intended to promote or benefit the Buona system and businesses in general. This holds true even if the decision also benefits Buona's financial or other individual interests.
Examples of actions that promote or benefit all Buona businesses and the system include enhancing the value of the brand's trademarks, improving customer service and satisfaction, improving product quality, improving uniformity across locations, encouraging modernization, and improving the competitive position of the system as a whole. These examples provide a framework for understanding the types of decisions Buona can make while still being considered to be exercising reasonable business judgment.
This clause is important for prospective franchisees because it clarifies the extent of Buona's decision-making authority and the conditions under which those decisions will be considered legitimate. While Buona has discretion in many areas, this clause ensures that their decisions are made with the overall benefit of the franchise system in mind. Franchisees should be aware that Buona's interests may sometimes align with their own, but this clause allows Buona to prioritize the system's interests, even if it also benefits them directly.