For Belocal, what constitutes a material breach under the agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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- X. Continuing Obligations. Franchisee and Franchisee's Principals make the foregoing representations, warranties, and covenants understanding that such representations, warranties, and covenants are continuing obligations. Franchisee agrees to cooperate with Franchisor to verify the continuing compliance of Franchisee and its Principals with such representations, warranties, and covenants. Any failure to comply with these representations, warranties, and covenants shall constitute a material event of default under this Agreement.
- Y. Background Checks. Franchisor has the right to obtain background checks on Franchisee and its Principals.
- Z. Crisis. Franchisee shall notify Franchisor immediately upon the occurrence of any situation that may have a significant negative impact on Franchisee, Franchisor, the Publication, or which could have a deleterious effect on the BELOCAL brand, Marks or System (a "Crisis"). Franchisee shall cooperate fully with Franchisor with respect to Franchisor's response to any Crisis and shall follow all of Franchisor's policies, procedures, and instructions in every such situation, including, without limitation, instructions regarding managing public relations and communications, as directed by Franchisor or as specified in the Franchise Brand Standards Manual and regardless of whether Franchisee has retained outside counsel or a public relations firm to assist with any such matter. A "Crisis" includes, but is not limited to, any event that occurs in connection with the Franchised Business or Publication that has or may cause harm or injury to the public, advertisers, or Independent Staff. In the event of the occurrence of a Crisis, Franchisor may establish emergency procedures which may require Franchisee to temporarily cease publishing the Publication, in which case Franchisor shall not be liable to Franchisee for any loss or costs, including consequential damages or lost profits occasioned thereby. Franchisor shall have the right to take control of the management of communications if Franchisor determines that the publicity surrounding the event is likely to have a material adverse effect on the reputation or goodwill of the Franchised Business, Publication, Marks, System, or Franchisor. Franchisee shall obtain Franchisor's consent before any press releases, interviews, or public statements are issued by Franchisee, or anyone on its behalf, about events that are likely to receive or are receiving significant negative public attention related to the Franchised Business, Publication, Marks, System, or Franchisor.
- AA. No Warranties. FRANCHISOR, ITS AFFILIATES, AND THEIR REPRESENTATIVES, MAKE NO WARRANTY WITH RESPECT TO ANY PRODUCTS, SERVICES, EQUIPMENT, SUPPLIES OR OTHER ITEMS FRANCHISOR, ITS AFFILIATES, AND THEIR REPRESENTATIVES,
APPROVE, SUPPLY, OR REQUIRE FRANCHISEE TO PURCHASE OR USE. FRANCHISOR, ITS AFFILIATES, AND THEIR REPRESENTATIVES EXPRESSLY DISCLAIM ALL WARRANTIES, EXPRESS AND IMPLIED, INCLUDING IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE, WITH RESPECT TO ANY SUCH PRODUCTS, EQUIPMENT, SUPPLIES, OR OTHER APPROVED ITEMS.
BB. Artificial Intelligence. Franchisee shall comply with any policies, procedures, and standards developed by Franchisor from time to time regarding use of artificial intelligence tools in the Franchised Business, with Franchised Business Data, or in connection with the Publication. As between Franchisee and Franchisor, and unless otherwise provided for in Franchisor's policies, procedures, and standards, Franchisor shall own all data used as the input to and output from any artificial intelligence tools. Unless otherwise provided for in Franchisor's policies, procedures, and standards, Franchisee shall obtain Franchisor's prior consent before using artificial intelligence tools (including but not limited to uploading Franchised Business Data), in connection with the Franchised Business Data, Franchised Business, or Publication.
6. FRANCHISOR'S OBLIGATIONS
Franchisor agrees to provide, or cause to be provided, the following to Franchisee:
- A. Franchise Brand Standards Manual. During the initial training program and for the Term of this Agreement, access to the Franchise Brand Standards Manual, either in paper and/or electronic form. The Franchise Brand Standards Manual is Confidential Information.
- B. Software Programs. For a reasonable fee, any Software Programs that Franchisor acquires or develops for use in the System; provided, that Franchisor is under no obligation to develop or acquire such Software Programs.
- C. Operational Advice. Ongoing advice and written materials, as Franchisor deems necessary in its sole discretion, concerning techniques for managing and operating the Franchised Business.
- D. Approved Products, Services, and Suppliers.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, several actions can constitute a material breach of the franchise agreement. These include failing to comply with the continuing obligations outlined in the agreement, such as representations, warranties, and covenants made by the franchisee and their principals. Additionally, making any material misrepresentation to Belocal or breaching any warranty or representation, whether in the agreement or otherwise, is considered a material breach.
Other actions that constitute a material breach include being charged with, convicted of, or pleading nolo contendere to a felony or indictable offense, being subject to adverse judgments or bankruptcy, becoming known for bad moral character, disparaging Belocal's reputation, or failing to maintain high standards of conduct. Furthermore, if the total expenses for any Belocal publication, including royalty and publication expenses, exceed the revenue received by Belocal in a given month, it is considered a material breach.
Additional breaches include defaulting under any other agreement with Belocal or its affiliates without curing the default, committing a second or subsequent event of default (regardless of whether the defaults are the same or have been cured), underreporting sales of advertising contracts, accepting unauthorized payments, beginning operations without prior authorization, operating under unapproved trademarks, or defaulting under Section 5.M. of the agreement. These stipulations highlight the importance of adhering to the terms and conditions set forth by Belocal to avoid potential termination of the franchise agreement.