Under the Buona franchise agreement, does a default by an affiliate of the franchisee under any agreement with the franchisor constitute a default under the franchise agreement?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
16.5 Cross-Default and Cross-Termination Provisions.
- (a) A default by Franchisee under this Agreement will be deemed a default of all agreements between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates.
A default by Franchisee under any other agreement between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates will be deemed a default under this Agreement.
A default by the guarantors of this Agreement or any other agreement of guaranty will be deemed a default of this Agreement.
For purposes of clarity, any agreements between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates include, without limitation, any other Franchise Agreement or Area Developer Agreement.
- (b) If this Agreement is terminated as a result of a default by Franchisee (or any affiliate of Franchisee), Franchisor or its Affiliates may, at their option, elect to terminate any or all other agreements between Franchisee (or an affiliate of Franchisee) and Franchisor or its Affiliates.
If any other agreement between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates is terminated as a result of a default by Franchisee (or any affiliate of Franchisee), Franchisor may, at its option, elect to terminate this Agreement.
It is agreed that an incurable or uncured default under this Agreement or any other agreement between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates will be grounds for termination of this Agreement and/or all agreements between Franchisee (or any affiliate of Franchisee) and Franchisor or its Affiliates without additional notice or opportunity to cure.
Source: Item 22 — CONTRACTS (FDD page 78)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, a default by a franchisee under any agreement with Buona or its affiliates will be considered a default of all agreements between the franchisee (or any affiliate of the franchisee) and Buona or its affiliates. This includes, without limitation, any other Franchise Agreement or Area Developer Agreement.
Specifically, if a franchisee or their affiliate defaults under any agreement with Buona or its affiliates, Buona can consider it a default under the current franchise agreement. Furthermore, if any other agreement between the franchisee (or an affiliate) and Buona is terminated due to a default, Buona has the option to terminate the current franchise agreement as well.
Buona also states that an incurable or uncured default under the franchise agreement or any other agreement between the franchisee (or an affiliate) and Buona will be grounds for termination of the franchise agreement and/or all agreements between the franchisee (or an affiliate) and Buona without additional notice or opportunity to cure. This cross-default and cross-termination provision is a critical aspect for prospective franchisees to understand, as it tightly links all agreements with Buona and its affiliates, increasing the risk of losing multiple business ventures due to a single default.