Under the Buona franchise agreement, what happens if the franchisee defaults on an Arrearage Agreement?

According to Buona's 2025 Franchise Disclosure Document, defaulting on an Arrearage Agreement is considered a material breach of the franchise agreement. An Arrearage Agreement is any agreement between the franchisee and Buona (or its affiliates) related to past due amounts. This includes promissory notes, payment plans, or amendments to the franchise agreement.

Specifically, the FDD states that a default under any Arrearage Agreement is a material default, regardless of why the franchisee failed to pay. This means Buona can pursue remedies available for a material breach, including termination of the franchise agreement.

This clause is significant for prospective Buona franchisees because it elevates the importance of adhering to any payment arrangements made with the franchisor. Even if a franchisee faces unforeseen financial difficulties, failing to meet the terms of an Arrearage Agreement can have severe consequences, potentially leading to the loss of the franchise. Franchisees should carefully consider their ability to meet these obligations before entering into such agreements with Buona.