Under what conditions related to security interests must a secured party agree to requirements deemed necessary by Buona?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall grant no security interest in any of its assets without the prior written consent of Franchisor and unless the secured party agrees that, in the event of any default by Franchisee under any documents related to the security interest (i) Franchisor shall be provided with notice of default and given a reasonable time within which to cure said default, (ii) Franchisor shall have the right and option, but not the obligation, to be substituted as obligor to the secured party and to cure any default of Franchisee or to purchase the rights of the secured party upon payment of all sums then due to such secured party, except such amounts which may have become due as a result of any acceleration of the payment dates based upon Franchisee's default and (iii) the secured party shall agree to such other requirements as Franchisor, in its sole discretion, deems reasonable and necessary to protect the integrity of the Marks and the System.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, a franchisee cannot grant a security interest in any of its assets without Buona's prior written consent. If a franchisee defaults under any documents related to the security interest, the secured party must agree to certain conditions.
First, Buona must receive notice of the default and be given a reasonable time to cure it. Second, Buona has the option, but not the obligation, to become the obligor to the secured party, cure the franchisee's default, or purchase the secured party's rights by paying all sums due. However, this excludes amounts due to accelerated payment dates resulting from the franchisee's default.
Finally, the secured party must agree to any other requirements that Buona, in its sole discretion, deems reasonable and necessary to protect the integrity of its marks and the Buona system. Buona retains the right to waive conditions or requirements related to transfers in its sole discretion and may require the principals of the transferee to execute a Guaranty and Assumption of Franchisee's Obligations.