Under the Buona franchise agreement, what is an 'Arrearage Agreement'?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.6 Arrearage Agreement.
Notwithstanding anything to the contrary set forth in this Agreement, Franchisee hereby acknowledges that any agreement between Franchisee and Franchisor or its Affiliates relating to past due amounts accruing hereunder (an "Arrearage Agreement"), including but not limited to any promissory note, payment plan or amendment to this Agreement shall be deemed to be a material part of this Agreement and shall be incorporated herein by reference.
A default under any Arrearage Agreement shall be deemed a material default of this Agreement, regardless of the reason Franchisee fails to pay the amount that is the subject of an Arrearage Agreement.
This provision does not require Franchisor to waive any payments due from Franchisee or to enter into any Arrearage Agreement.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, an Arrearage Agreement is any agreement between the franchisee and Buona (or its affiliates) that relates to past due amounts. This can include promissory notes, payment plans, or amendments to the franchise agreement.
The FDD states that any Arrearage Agreement is considered a material part of the franchise agreement and is incorporated by reference. This means that the terms of the Arrearage Agreement are legally binding as if they were written directly into the franchise agreement itself.
A critical point for prospective Buona franchisees is that a default under any Arrearage Agreement is considered a material default of the franchise agreement, regardless of why the franchisee failed to pay. However, Buona is not required to waive any payments or enter into any Arrearage Agreement.