Upon termination of the Buona franchise agreement, is the franchisee entitled to any payment for goodwill?

According to Buona's 2025 Franchise Disclosure Document, franchisees are not entitled to any payment for goodwill upon termination or expiration of the franchise agreement. The FDD explicitly states that no payment is due to the franchisee from any source for any claimed goodwill or other equity based on the operation or ownership of the franchised business. Additionally, no fees, charges, or other payments from the franchisee to Buona or its affiliates are refundable, either wholly or partially. This policy is common in franchising, as the franchisor owns the brand and system, and the franchisee is granted a limited license to operate under it.

Buona retains the right to purchase the franchisee's assets, such as improvements, furniture, fixtures, equipment, advertising materials, ingredients, products, materials, supplies, and paper goods, at their then-current fair market value. However, this valuation specifically excludes any value for goodwill or going concern value. If Buona and the franchisee cannot agree on a fair market value, an independent appraiser designated by Buona will determine the value, which will be binding.

This lack of compensation for goodwill is a significant consideration for potential Buona franchisees. It means that any value built up in the business through the franchisee's efforts accrues to the benefit of Buona, not the franchisee, upon termination or expiration of the agreement. Franchisees should factor this into their financial projections and consider it a risk of investing in the franchise. Understanding this aspect of the franchise agreement is crucial for making an informed investment decision.