Under what conditions can Buona terminate the Area Development Agreement with cause?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in ADA | Summary | |
|---|---|---|---|
| a. | Length of term of the agreement | Section 4 | Agreement expires on our acceptance and execution of the Franchise Agreement for the last franchise to be developed. |
| b. | Renewal or extension of the term | Not applicable | Not applicable |
| c. | Requirements for you to renew or extend | Not applicable | Not applicable |
| d. | Termination by you | Not applicable | Not applicable |
| e. | Termination by us without cause | Not applicable | Not applicable |
| 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. |
| j. | Assignment of contract by us. | Section 8.1 | We have an unrestricted right to assign. |
| k. | "Transfer" by you – definition | Section 8.2 | Include transfer of any interest in the ADA or in the Developer. |
| l. | Our approval of transfer by you | Section 8.2 | You have no right to transfer any interest in the ADA or Developer. Any attempted transfer will be null and void. |
| m. Conditions for our approval of transfer | Not applicable | Not applicable | |
| n. | Our right of first refusal to acquire your business | Not applicable | Not applicable |
| o. | Our option to purchase your business | Not applicable | Not applicable |
| p. | Your death or disability | Not applicable | Not applicable |
| q. | Non-competition covenants during the term of the agreement | Section 6.4 | No involvement in a similar business or with a business granting franchises for similar businesses; subject to applicable state law. |
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) with cause if the developer commits a listed violation as detailed in Section 7 of the ADA. These violations, which constitute defaults that cannot be cured, include events such as the developer filing for bankruptcy or being involved in a similar proceeding.
Buona can also terminate the ADA if the developer fails to comply with the development schedule outlined in the agreement, breaches the agreement itself, engages in an unauthorized transfer of interests in the ADA or the developer entity, or breaches any Franchise Agreement associated with the ADA. These conditions provide Buona with specific grounds for terminating the ADA if the developer fails to meet their obligations or engages in prohibited activities.
It is important for prospective Buona developers to carefully review Section 7 of the Area Development Agreement to fully understand the circumstances under which Buona can terminate the agreement with cause. Understanding these conditions is crucial for maintaining a successful and compliant development relationship with Buona.