According to the Belocal Franchise Agreement, what constitutes a 'Transfer' by the franchisee?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| manipulates, corrupts, or improperly modifies the IT Systems or any data stored therein; or (iv) transfers, copies, or discloses any data from the IT Systems except as expressly permitted under the Franchise Agreement; other defaults that are incapable of being cured. A provision in the Franchise Agreement which terminates the Franchise Agreement upon your bankruptcy may not be enforceable under Title 11, United States Code Section 101. Franchisor has a step-in right upon default. | ||
| i. Franchisee's obligations on termination/nonrenewal | Sections 7. and 11. | Comply with wind-down obligations; pay us wind-down damages, if applicable; stop using our Marks, Copyrighted Materials, and confidential information; return the Franchise Brand Standards Manual and Copyrighted Materials; stop operating the Franchised Business and do not represent yourself as a current franchisee; pay amounts due; at our option, assign to us your business directory listings and the Online Presences; grant us control of any Online Presence; comply with our instructions regarding the Technology and Franchised Business Data; comply with confidentiality, non- competition, and non solicitation covenants; pay us all costs, damages, and expenses we incur because of your defaults or resulting from or subsequent to the termination of the agreement (including enforcement of provisions). |
| j. | Section 9.A. | We may transfer our rights without restriction. |
| Assignment of | ||
| contract by franchisor | ||
| k. "Transfer" by franchisee – defined | Section 9.B. | You and your Principals must not transfer any rights or obligations under the Franchise Agreement, any assets of your Franchised Business, or any direct or indirect interest in you except in compliance with the Franchise Agreement. "Transfer" means any issuance, sale, assignment, gift, pledge, mortgage or any other encumbrance, transfer by bankruptcy, transfer by judicial order, merger, consolidation share exchange, transfer by operation of law or otherwise, whether direct or indirect, voluntary or involuntary. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 49–55)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a 'Transfer' by the franchisee is broadly defined and encompasses various scenarios. It is important for prospective franchisees to understand these conditions, as any transfer not in compliance with the Franchise Agreement could lead to a breach of contract.
Specifically, a 'Transfer' includes any issuance, sale, assignment, gift, pledge, mortgage, or any other encumbrance. This also extends to transfers resulting from bankruptcy or judicial orders. Furthermore, the definition covers mergers, consolidations, share exchanges, and transfers occurring by operation of law or otherwise. The agreement emphasizes that these transfers can be direct or indirect, voluntary or involuntary, indicating a comprehensive scope intended to cover virtually any change in ownership or control.
This broad definition means that franchisees must seek Belocal's approval for a wide range of transactions affecting the franchise. This requirement allows Belocal to maintain control over who operates its franchises and ensures that any new operators meet its standards. Prospective franchisees should carefully review Section 9.B of the Franchise Agreement to fully understand the implications and requirements for transferring their franchise.