What is the definition of 'Principal' according to the Belocal Agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
ATTACHMENT C PRINCIPALS' UNDERTAKING
In consideration of, and as an inducement to, the execution of that certain Franchise Agreement, and any revisions, modifications, and amendments thereto, (collectively, "Agreement") by and between N2 Franchising, Inc. ("Franchisor"), and [Franchisee], ("Franchisee"), and dated [Insert Date of Agreement]), the undersigned (each, a "Principal") agree(s) as follows:
Each Principal acknowledges and agrees as follows:
(a) The undersigned is a "Principal," as defined in the Agreement, and has read the terms and conditions of the Agreement and acknowledges that the execution of this Principal's Undertaking is in partial consideration for, and a condition to, Franchisor entering into the Agreement with Franchisee and that Franchisor would not have entered into the Agreement without the execution of this Principal's Undertaking; and
(b) Without limiting any of Franchisee's obligations under the Agreement, Principal (i) makes all of the covenants, representations, warranties, and agreements set forth in Section 5.L. (Legal Compliance), Section 7. (Confidentiality, Covenants Against Unfair Competition and Solicitation), Section 8. (Use of Marks and Copyrighted Materials), Section 9. (Transfer and Assignment), and Section 14. (Applicable Law; Dispute Resolution) of the Agreement and is obligated to perform thereunder; and (ii) represents that each and every representation of Franchisee made in connection with the Agreement is true, correct, and complete in all respects as of the time given and as of the time of the undersigned's execution of this Principals' Undertaking.
(c) If Principal is an Owner, Principal (i) makes all of the covenants, representations, and warranties set forth in Sections 7.B and 7.D of the Agreement and (ii) represents that each and every representation of Franchisee made in connection with the Agreement is true, correct, and complete in all respects as of the time given and as of the time of the undersigned's execution of this Principals' Undertaking.
If Principal is not an Owner, Principal shall not be bound by Sections 7.B and 7.D of the Agreement.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a 'Principal' is defined within Attachment C, the Principals' Undertaking, of the franchise agreement. Specifically, the document states that by signing the Principals' Undertaking, the individual acknowledges they are a 'Principal' as defined in the agreement and have read its terms and conditions. This acknowledgment is a partial consideration for Belocal entering into the agreement with the franchisee. Belocal would not agree to the franchise agreement without the execution of the Principal's Undertaking.
Furthermore, the Principal agrees to certain obligations and responsibilities outlined in specific sections of the Franchise Agreement. These include covenants, representations, warranties, and agreements related to legal compliance, confidentiality, non-competition, non-solicitation, use of marks and copyrighted materials, transfer and assignment, and dispute resolution. If the Principal is an Owner, they make all the covenants, representations, and warranties set forth in Sections 7.B and 7.D of the Agreement.
In essence, the Principal assumes a direct and significant role in ensuring the franchisee's compliance with the franchise agreement. This includes potential financial liabilities as a guarantor and adherence to key operational and legal requirements. Prospective Belocal franchisees should carefully review Attachment C and understand the full scope of obligations and liabilities that a 'Principal' undertakes.