Under what insolvency-related conditions can the Buona franchise agreement be terminated without notice?
Buona Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.1 Termination Without Notice Due To Insolvency. Franchisee shall be deemed to be in default under this Agreement, and all rights granted herein shall automatically terminate without notice to Franchisee, if Franchisee shall become insolvent or make a general assignment for the benefit of creditors; if a petition in bankruptcy is filed by Franchisee or such a petition is filed against Franchisee and not opposed by Franchisee; if Franchisee is adjudicated bankrupt or insolvent; if a receiver or other custodian (permanent or temporary) of Franchisee's assets or property, or any part thereof, is appointed by any court of competent jurisdiction; if proceedings for a composition with creditors under applicable law of any jurisdiction should be instituted by Franchisee or against Franchisee and not opposed by Franchisee; if a final judgment remains unsatisfied or of record for thirty (30) days or longer (unless a supersedeas bond is filed); if Franchisee is dissolved; if execution is levied against Franchisee's property or business; if suit to foreclose any lien or mortgage against the premises or equipment of the Franchised Business is instituted against Franchisee and not dismissed within thirty (30) days; or if the real or personal property of the Franchised Business shall be sold after levy thereon by any sheriff, marshal or constable.
Source: Item 23 — RECEIPTS (FDD pages 78–356)
What This Means (2025 FDD)
According to Buona's 2025 Franchise Disclosure Document, the franchise agreement can be terminated without notice if the franchisee becomes insolvent or takes certain actions indicative of financial distress. This includes making a general assignment for the benefit of creditors, which means the franchisee transfers assets to a third party to pay off debts.
The agreement can also be terminated without notice if a bankruptcy petition is filed by the franchisee, or if such a petition is filed against the franchisee and not opposed by the franchisee. Further conditions include being adjudicated bankrupt or insolvent, or if a receiver or custodian is appointed for the franchisee's assets. Similarly, if the franchisee institutes proceedings for a composition with creditors or such proceedings are instituted against them without opposition, the agreement can be terminated immediately.
Other conditions that trigger immediate termination include a final judgment remaining unsatisfied for 30 days or longer (unless a supersedeas bond is filed), the dissolution of the franchisee, execution levied against the franchisee's property or business, a suit to foreclose any lien or mortgage against the premises or equipment of the franchised business instituted against the franchisee and not dismissed within 30 days, or the sale of the real or personal property of the franchised business after levy by a sheriff, marshal, or constable. These terms highlight the critical importance of maintaining financial stability and addressing legal or financial challenges promptly to avoid immediate termination of the Buona franchise agreement.