What constitutes a 'Competitive Business' for Belocal franchisees, specifically regarding selling digital or print advertising?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
The term "Competitive Business" includes the following divisible and severable business lines or services (each a "Competitive Service") which the Franchisee's Franchised Business provided (a) for covenants applicable during the Term, during the Term and (b) for covenants applicable post-term, at any time within the twelve-month period prior to the termination, expiration, or transfer of this Agreement:
(i) selling digital and/or print advertising to businesses for publication in or related to digital or print publications that compete with any N2 publication(s), including BELOCAL publications;
(ii) publishing and/or facilitating the publishing of digital or print publications that compete with any N2 publication(s), including BELOCAL publications;
(iii) developing relationships among members of Communities within the Territory, or members of Industry Groups within the Territory and within ten miles of the Territory, for the purpose of selling or marketing digital or print publications that compete with any N2 publication(s), including BELOCAL publications;
(iv) organizing, sponsoring, or hosting events for advertisers in the Publication or members of Communities within the Territory, or members of Industry Groups within the Territory and within ten miles of the Territory, for the purpose of selling or marketing digital or print publications, or digital or print advertising in digital or print publications, that compete with any N2 publication(s); or
(v) offering or selling digital marketing and advertising services which are offered or sold by Franchisor or its affiliates or are or were offered and sold by Franchisee.
H.
Reasonableness of Covenants.
Franchisee and Principals agree that the preceding covenants contain reasonable limitations as to time, geographical area, and scope of activity to be restrained and do not impose a greater restraint than is necessary to protect the goodwill or other legitimate business interests of Franchisor.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a "Competitive Business" includes specific business lines or services that would be considered competitive to Belocal. These competitive services are applicable both during the term of the franchise agreement and, in some cases, for a 12-month period after termination, expiration, or transfer of the agreement. This definition is important because it outlines the activities a franchisee must avoid to remain in compliance with the franchise agreement and to avoid potential legal issues related to competition with Belocal.
Specifically, a "Competitive Business" includes selling digital or print advertising to businesses for publication in or related to digital or print publications that compete with any N2 publication, including Belocal publications. It also includes publishing or facilitating the publishing of digital or print publications that compete with any N2 publication, including Belocal publications. Furthermore, developing relationships among members of Communities or Industry Groups within the Territory, or within ten miles of the Territory, for the purpose of selling or marketing digital or print publications that compete with any N2 publication is considered a competitive business.
Additionally, organizing, sponsoring, or hosting events for advertisers in the Publication or members of Communities or Industry Groups within the Territory, or within ten miles of the Territory, for the purpose of selling or marketing digital or print publications, or digital or print advertising in digital or print publications, that compete with any N2 publication(s) is also considered a Competitive Business. Finally, offering or selling digital marketing and advertising services which are offered or sold by Belocal or its affiliates or are or were offered and sold by the franchisee is included in the definition.
Belocal emphasizes that the covenants containing these limitations are considered reasonable in terms of time, geographical area, and scope of activity. They are designed to protect the goodwill and legitimate business interests of Belocal. However, the document also provides for the possibility that a court or arbitrator might find these restrictions too broad, in which case the restrictions may be adjusted to a ten-mile radius around the territory or even just the territory itself.