What are the circumstances under which Belocal would charge a Wind-Down Damages fee, and how is the amount calculated?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Management Fee | 45% of monthly Cash Received, plus any expenses we incur in managing the Franchised Business | Monthly | Only payable in the event we must operate your franchise due to death, disability, defaults etc. The Management Fee is in addition to other fees due to us. |
| Customer Complaint Fee | Our costs and expenses associated with our response to and any resolution of a complaint | On demand | If an advertiser, client, or third party complains to us and you fail to satisfactorily remedy the complaint, you will pay us our costs and expenses associated with our response to and any resolution of the complaint. |
| Wind-Down Damages | An amount equal to the greater of (a) 6 months' worth of the average Royalty you paid for the 12 months prior to the default or (b) $2,500 | On demand | Only payable if you fail to comply with the wind-down procedures or abandon the Franchised Business. |
| Transfer Damages | Greater of 15% of transfer price or $25,000 | Within 15 days of our demand | You will pay these transfer damages if you do not comply with the transfer terms under the Franchise Agreement. |
Source: Item 6 — OTHER FEES (FDD pages 14–31)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a Wind-Down Damages fee may be charged if a franchisee fails to comply with the wind-down procedures or abandons the franchised business. This fee is intended to compensate Belocal for losses incurred due to the franchisee's improper closure or abandonment of the business.
The amount of the Wind-Down Damages fee is calculated as the greater of two amounts: either six months' worth of the average royalty paid by the franchisee for the twelve months prior to the default, or a flat fee of $2,500. This means that Belocal will assess the franchisee's royalty payments over the previous year, calculate the average, multiply that by six, and then compare that figure to $2,500. The higher of the two amounts will be the Wind-Down Damages fee.
For a prospective Belocal franchisee, this means it is crucial to adhere to the wind-down procedures outlined in the Franchise Agreement if they decide to exit the business. Abandoning the business or failing to follow the proper closure process can result in a significant financial penalty. Franchisees should carefully review the wind-down procedures and understand the potential costs associated with non-compliance.