Can Belocal engage in the sale of advertising under the Marks without compensating the Belocal franchisee?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Additionally, we, our affiliates, and any other authorized person or entity will have the right, among others, (i) to develop and establish other business systems (including systems that distribute products or services similar to those offered by the Franchised Business) using the Marks, or other names or marks, and to grant licenses to use those systems at any location without providing any rights to you; (ii) to advertise and promote any business of The N2 Company or any N2 Franchising, Inc. franchised business anywhere; (iii) to operate, and license others to operate, any business of The N2 Company or any N2 Franchising, Inc. franchised business or any publishing business of any of our affiliates anywhere, including locations that are inside, adjacent to, or surrounded by your Territory; and (iv) to engage, directly or indirectly, at wholesale, retail, or otherwise, in the production, distribution, license, and sale of all forms (including electronic forms) of magazines, newsletters, advertising, marketing, graphic and web design, or other services and products, under the Marks, or under other names or marks, without compensation to you, at any location, including in the Territory, through any method of distribution, including, but not limited to, mail order catalogs and the Internet, regardless of the proximity to, or the competitive impact on, the Franchised Business. If we solicit or accept orders from within your Territory, we are under no obligation to compensate you.
Source: Item 12 — TERRITORY (FDD pages 42–44)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, Belocal, its affiliates, and any authorized entities have the right to sell advertising under the Belocal marks without compensating the franchisee. Specifically, Belocal can engage directly or indirectly in the production, distribution, licensing, and sale of all forms of advertising and marketing services under the Belocal marks without providing any compensation to the franchisee. This includes sales within the franchisee's territory through any method of distribution, including mail order catalogs and the Internet.
This aspect of the franchise agreement means that a Belocal franchisee's revenue potential could be directly impacted by Belocal's own sales efforts within the same territory. While the franchisee is responsible for meeting minimum performance standards, Belocal retains the right to compete directly without sharing any of the revenue generated. This could create a competitive dynamic where the franchisee must compete with the franchisor itself for advertising sales within their designated area.
Furthermore, Belocal is under no obligation to compensate the franchisee even if they solicit or accept orders from within the franchisee's territory. This lack of territorial exclusivity and the franchisor's ability to directly compete without compensation are important considerations for potential franchisees. It highlights the need to carefully evaluate the market conditions and the potential for competition from Belocal itself when assessing the viability of the franchise opportunity.