Under what conditions can Buona terminate the Area Development Agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in ADA | Summary |
|---|---|---|
| f. Termination by us with cause | Section 7 | We can terminate if you commit a listed violation. |
| g. "Cause" defined - defaults which can be cured | Section 7 | Not applicable |
| h. "Cause" defined - defaults which cannot be cured | Section 7 | Bankruptcy or similar proceeding, failure to comply with development schedule, breach of the agreement, unauthorized transfer, breach of any Franchise Agreement. |
| i. Your obligations on termination/ non-renewal | Section 7.4 | No further right to develop; however, termination does not affect existing franchise agreements. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 52–60)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, Buona can terminate the Area Development Agreement (ADA) if the developer commits a listed violation, as detailed in Section 7 of the ADA. These violations, which constitute 'cause' for termination, include defaults that cannot be cured. Specifically, Buona may terminate the ADA if the developer declares bankruptcy or undergoes a similar proceeding.
Additionally, Buona can terminate the ADA if the developer fails to comply with the development schedule outlined in the agreement. This means that if the developer does not open the Buona restaurants according to the agreed-upon timeline, Buona has grounds for termination. Other causes for termination include breach of the Area Development Agreement itself, engaging in an unauthorized transfer of the agreement, or breaching any individual Franchise Agreement under the ADA.
It is important to note that termination of the ADA does not affect any existing franchise agreements already in place. This means that if a developer has already opened Buona restaurants under individual franchise agreements, those agreements remain in effect even if the ADA is terminated. Prospective developers should carefully review Section 7 of the Area Development Agreement to fully understand the conditions under which Buona can terminate the agreement and the implications of such termination.