What is the consequence if a Belocal franchisee attempts to transfer the agreement without the franchisor's written consent?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall not transfer or assign this Agreement without Franchisor's prior written consent.
Any purported assignment or transfer, by operation of law or otherwise, made in violation of this Agreement shall be null and void and shall constitute a material breach under this Agreement.
Franchisor may terminate this Agreement immediately upon written notice to Franchisee, without an opportunity to cure, if:
- (2) Franchisee or any Principal transfers or attempts to transfer any interest in this Agreement, Franchisee, or the Franchised Business in violation of Section 9. of this Agreement;
If Franchisee or any of its Principals engages in a transfer without first complying with the applicable transfer provisions of this Agreement (including, without limitation, the provisions of this Section 9), Franchisee agrees to pay Franchisor, within 15 days of receiving notice from Franchisor, in addition to the amounts owed under this Agreement, transfer damages equal to the greater of (a) 15% of the price paid by the transferee to Franchisee or any Principal, as applicable; or (b) $25,000 ("Transfer Damages"). The parties to this Agreement acknowledge and agree that it would be impracticable to determine precisely the damages that Franchisor would incur from any unauthorized transfer of this Agreement. The parties consider this Transfer Damages provision to be a reasonable, goodfaith estimate of those damages.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a franchisee is not allowed to transfer or assign their Franchise Agreement without first getting written consent from Belocal. If a franchisee attempts to transfer the agreement without this consent, the attempted transfer will be considered invalid, or "null and void."
Furthermore, such an unapproved transfer constitutes a material breach of the Franchise Agreement. This means Belocal would have grounds to take action against the franchisee for violating the terms of the agreement.
In addition to the agreement being null and void and considered a material breach, Belocal states that if a franchisee engages in a transfer without first complying with the applicable transfer provisions of the agreement, the franchisee must pay Belocal, within 15 days of receiving notice from Belocal, transfer damages equal to the greater of (a) 15% of the price paid by the transferee to Franchisee or any Principal, as applicable; or (b) $25,000. Belocal states that this is a reasonable, good faith estimate of damages that Belocal would incur from any unauthorized transfer of the agreement.
Belocal also has the right to terminate the agreement immediately if the franchisee or any principal transfers or attempts to transfer any interest in the agreement, franchisee, or the franchised business in violation of Section 9 of the agreement. This could result in the franchisee losing their franchise and all associated rights.