Is any other encumbrance considered 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, any encumbrance is considered a transfer of the franchise agreement. Belocal requires franchisee approval for any transfer or assignment of the franchise agreement. According to the FDD, a "transfer" includes any issuance, sale, assignment, gift, pledge, mortgage, or any other encumbrance. It also includes 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.
Belocal also considers any ownership or structural changes in the franchisee to be a transfer. This includes any merger, reorganization, transfer of shares, stock, or interests among owners, or issuance of additional shares or classes of stock or additional partnership interests. If a franchisee wishes to transfer any interest in the franchise, they must apply to Belocal for consent, and Belocal has 30 days to notify the franchisee of its decision after receiving all requested information.
If a franchisee or its principals engage in a transfer without complying with the agreement's transfer provisions, the franchisee must pay Belocal transfer damages. These damages are equal to the greater of 15% of the price paid by the transferee or $25,000. Belocal considers this provision a reasonable estimate of the damages they would incur from an unauthorized transfer.