What are the consequences if a Belocal franchisee engages in a transfer without complying with the applicable transfer provisions?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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- F. Transfer Damages. 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 damage
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a franchisee who engages in a transfer without adhering to the transfer provisions outlined in the franchise agreement will face specific financial consequences. Specifically, the franchisee must pay Belocal transfer damages.
The transfer damages are calculated as the greater of two amounts: 15% of the price the transferee pays to the franchisee or any principal involved, or a fixed sum of $25,000. This payment is due within 15 days of the franchisee receiving notice from Belocal. This is in addition to any other amounts the franchisee may already owe under the agreement.
The franchise agreement acknowledges that precisely determining the damages Belocal would incur from an unauthorized transfer is impractical. Therefore, the transfer damages provision is considered a reasonable and good-faith estimate of these potential damages. This clause serves to protect Belocal from the potential harm of unapproved transfers, ensuring they maintain control over who operates under their brand and that proper procedures are followed during ownership changes.