What are the consequences if a Belocal franchisee or its principal is charged with or convicted of a felony?

According to Belocal's 2025 Franchise Disclosure Document, if a franchisee or any principal is charged with, convicted of, or pleads nolo contendere to a felony or indictable offense, it constitutes grounds for default under the franchise agreement. This clause applies regardless of whether the charge, conviction, or plea occurs before or after the effective date of the agreement.

This provision gives Belocal significant latitude to terminate the franchise agreement if a franchisee or principal faces felony charges. The inclusion of being "charged with" a felony, in addition to conviction or pleading no contest, means that Belocal doesn't have to wait for a final verdict to take action. This is a stricter standard than some franchises, which may only consider convictions as grounds for termination.

The FDD also states that if the franchisee or principal becomes known to Communities, Industry Groups, or advertisers as being of bad moral character, disparages, embarrasses, or tarnishes Belocal's reputation, or fails to comport itself at all times in accordance with the highest standards of conduct and behavior, consistent with its responsibilities as a franchisee, it can also be grounds for default. This clause, combined with the felony clause, underscores the importance Belocal places on maintaining its brand image and reputation.

Prospective franchisees should carefully consider the implications of these clauses. A felony charge against a franchisee or principal, even if ultimately dismissed, could potentially jeopardize the franchise agreement. Franchisees should discuss these provisions with legal counsel to fully understand their rights and obligations.