According to the Belocal Franchise Agreement, what constitutes a 'transfer' of the agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
For purposes of this Agreement, the term "transfer" shall mean any issuance, sale, assignment, gift, pledge, mortgage or any other encumbrance, transfer by bankruptcy, transfer by judicial order, merger, consolidation share exchange, or transfer by operation of law or otherwise, whether direct or indirect, voluntary or involuntary.
Any ownership or structural changes in Franchisee (including but not limited to, any merger; reorganization; transfer of shares, stock, or interests among owners; or issuance of additional shares or classes of stock or additional partnership interests) shall constitute and be deemed a transfer.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a 'transfer' of the Franchise Agreement encompasses a broad range of transactions. It's not limited to just a direct sale or assignment but includes various indirect methods as well. This definition is important because Belocal requires prior written consent for any transfer, and unauthorized transfers can be considered a material breach of the agreement.
Specifically, the term 'transfer' includes any issuance, sale, assignment, gift, pledge, mortgage, or any other encumbrance. It also covers transfers resulting from bankruptcy, judicial orders, mergers, consolidations, or share exchanges. Furthermore, any transfer by operation of law, whether direct or indirect, voluntary or involuntary, falls under this definition. This broad scope ensures that Belocal has control over who becomes a franchisee and maintains the integrity of its franchise system.
Moreover, any ownership or structural changes within the franchisee's business entity are also considered a transfer. This includes mergers, reorganizations, transfers of shares or stock among owners, or the issuance of additional shares or classes of stock or additional partnership interests. Therefore, even internal changes within the franchisee's organization that alter ownership or control must be disclosed to and approved by Belocal. This requirement allows Belocal to assess the qualifications and suitability of new or changing owners and principals within the franchise.
For a prospective Belocal franchisee, this means that any change in ownership, structure, or control of their business, no matter how it's executed, requires the franchisor's approval. Failing to obtain this approval can have serious consequences, including potential termination of the franchise agreement. Franchisees need to be aware of these restrictions and plan accordingly when considering any changes to their business structure or ownership.