Is a consolidation considered a transfer of the Belocal franchise agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
For purposes of this Agreement, the term "transfer" shall mean any issuance, sale, assignment, gift, pledge, mortgage or any other encumbrance, transfer by bankruptcy, transfer by judicial order, merger, consolidation share exchange, or transfer by operation of law or otherwise, whether direct or indirect, voluntary or involuntary.
Any ownership or structural changes in Franchisee (including but not limited to, any merger; reorganization; transfer of shares, stock, or interests among owners; or issuance of additional shares or classes of stock or additional partnership interests) shall constitute and be deemed a transfer.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a consolidation is considered a transfer of the franchise agreement. The document states that the term "transfer" includes consolidations. This means that if a Belocal franchisee undergoes a consolidation, it is treated as a transfer of the franchise agreement.
As a result, the franchisee must obtain Belocal's prior written consent for the consolidation to be valid. Failure to do so constitutes a material breach of the franchise agreement, potentially leading to termination. Belocal also requires the franchisee to submit all necessary information for approval of the proposed transfer. Belocal has a reasonable period of time, not to exceed 30 days, to notify the franchisee of its decision after receiving all requested information.
Furthermore, any ownership or structural changes in the franchisee, including a consolidation, are deemed a transfer. This underscores the importance of adhering to the transfer requirements outlined in the franchise agreement. A prospective franchisee should carefully consider these transfer provisions and associated costs, such as transfer fees, before entering into a franchise agreement with Belocal.