Under what conditions can Buona withhold approval for relocation or reconstruction after damage to the premises?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
However, if, through no fault of Franchisee, the premises are damaged or destroyed by an event not within the control of Franchisee such that repairs or reconstruction cannot be completed within six (6) months thereafter, then Franchisee shall have thirty (30) days after such event in which to apply for Franchisor's approval to relocate the Franchised Business and/or reconstruct the premises, which approval shall not be unreasonably withheld, provided Franchisee is not then in default under this Agreement or any other agreement between Franchisee and Franchisor or any of its Affiliates, but may be conditioned upon the payment of an agreed minimum royalty to Franchisor during the period in which the Franchised Business is not in operation;
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to the 2025 Buona Franchise Disclosure Document, if a Buona restaurant premises is damaged or destroyed through no fault of the franchisee, preventing repairs or reconstruction within six months, the franchisee has 30 days to apply for Buona's approval to relocate or reconstruct.
Buona will not unreasonably withhold approval for relocation or reconstruction, provided the franchisee is not in default under the Franchise Agreement or any other agreement with Buona or its affiliates. However, Buona may condition its approval upon the payment of an agreed minimum royalty during the period the restaurant is not operating.
This clause protects the franchisee from being penalized for circumstances beyond their control, such as natural disasters or accidental damage. However, it also allows Buona to ensure that it continues to receive some income during the downtime, and that the franchisee remains compliant with all agreements. The franchisee should clarify what constitutes an 'agreed minimum royalty' to fully understand the financial implications during such a period.