What constitutes a failure to comply with Belocal's wind-down procedures?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Management Fee | 45% of monthly Cash Received, plus any expenses we incur in managing the Franchised Business | Monthly | Only payable in the event we must operate your franchise due to death, disability, defaults etc. The Management Fee is in addition to other fees due to us. |
| Customer Complaint Fee | Our costs and expenses associated with our response to and any resolution of a complaint | On demand | If an advertiser, client, or third party complains to us and you fail to satisfactorily remedy the complaint, you will pay us our costs and expenses associated with our response to and any resolution of the complaint. |
| Wind-Down Damages | An amount equal to the greater of (a) 6 months' worth of the average Royalty you paid for the 12 months prior to the default or (b) $2,500 | On demand | Only payable if you fail to comply with the wind-down procedures or abandon the Franchised Business. |
| Transfer Damages | Greater of 15% of transfer price or $25,000 | Within 15 days of our demand | You will pay these transfer damages if you do not comply with the transfer terms under the Franchise Agreement. |
Source: Item 6 — OTHER FEES (FDD pages 14–31)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, if a franchisee fails to comply with the wind-down procedures or abandons the franchised business, they will have to pay wind-down damages. The wind-down damages will be the greater of (a) 6 months’ worth of the average Royalty the franchisee paid for the 12 months prior to the default or (b) $2,500. This amount is due on demand.
Wind-down procedures are the steps a franchisee must take when closing their Belocal business, either at the end of the franchise term or earlier if the agreement is terminated. These procedures are designed to protect the Belocal brand and ensure a smooth transition.
Failing to follow these procedures can result in Belocal assessing damages, potentially costing the franchisee a significant amount. It is important for prospective franchisees to fully understand what Belocal requires during the wind-down process, as non-compliance can lead to considerable financial penalties.