What constitutes 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.
If Franchisee wishes to transfer all or part of its interest in the Franchised Business or this Agreement or in substantially all of the assets of the Franchised Business, or if Franchisee or any Principal wishes to transfer any ownership interest in Franchisee, transferor and the proposed transferee must apply to Franchisor for its consent.
Franchisee agrees to submit to Franchisor all information Franchisor may require in order to determine whether to approve a proposed transfer of the Franchised Business, and Franchisor agrees to notify Franchisee of its approval or disapproval within a reasonable period of time, not to exceed 30 days, after Franchisor has received all requested information relating to any proposed transfer of the Franchised Business.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a 'transfer' of the franchise agreement is broadly defined. Belocal requires franchisees to obtain prior written consent from the franchisor before transferring or assigning the agreement. Any attempt to transfer without this consent, whether by law or otherwise, is considered a breach of the agreement and will be void.
The term 'transfer' encompasses a wide range of transactions, including any issuance, sale, assignment, gift, pledge, mortgage, or other encumbrance. It also includes transfers resulting from bankruptcy, judicial orders, mergers, consolidations, or share exchanges. This definition extends to both direct and indirect transfers, whether voluntary or involuntary.
Furthermore, any changes in the ownership or structure of the franchisee's business are also considered a transfer. This includes mergers, reorganizations, transfers of shares or stock among owners, and the issuance of additional shares or classes of stock or additional partnership interests. If a franchisee intends to transfer any interest in the franchised business, the agreement, or substantially all of the assets of the business, they must apply to Belocal for consent. The franchisor has the right to request any information needed to evaluate the proposed transfer and will notify the franchisee of its decision within a reasonable period, not exceeding 30 days after receiving all requested information.
This broad definition of 'transfer' gives Belocal significant control over who becomes a franchisee and ensures that any changes in ownership or business structure meet their standards. Prospective franchisees should be aware of these restrictions and the need to obtain franchisor approval for any transfer-related activities.