In the event of a Security Breach, is a Belocal franchisee required to cooperate with the Franchisor to investigate and remedy the matter?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall cooperate with Franchisor in any audit or inspection that Franchisor may conduct from time to time relating to Franchisee's processing of Personal Information.
In addition, if Franchisee becomes aware of any actual or suspected unauthorized access, processing, loss, use, disclosure, alteration, destruction, transfer, or other compromise or acquisition of or access to any Personal Information, whether such information is stored in paper or electronic form, or information that might reasonably expose Franchisor to any harm or prejudice of any type or actual or suspected intrusion by an unauthorized third party into Franchisee's or Franchisor's computers, networks, servers, IT resources, or paper files ("Security Breach"), Franchisee shall immediately notify the Franchisor via telephone of such matter and shall thereafter cooperate with Franchisor to investigate and remedy such matter.
Except to the extent required by applicable law, no public disclosure of any instance of such unauthorized access or breach shall be made by Franchisee unless Franchisor has authorized the provision of notice and the form of such notice in writing.
Franchisee shall reimburse Franchisor for all reasonable Notification and Remediation Related Costs (as defined below) incurred by Franchisor arising out of or in connection with any such Security Breach that is directly or indirectly caused by Franchisee, its Principals, and its Independent Staff. "Notification and Remediation Related Costs" shall mean Franchisor's internal and external costs associated with addressing and responding to any Security Breach, including but not limited to: (i) preparation and mailing or other transmission of legally required notifications to affected individuals, regulators, and attorneys general; (ii) preparation and mailing or other transmission of such other communications to customers, agents, or others as Franchisor deems reasonably appropriate; (iii) establishment of a call center or other communications procedures in response to such Security Breach (e.g., customer service FAQs, talking points, and training); (iv) engagement of information technology consultants, public relations, and other similar crisis management services; (v) payment of legal and accounting fees and expenses associated with Franchisor's investigation of and response to such Security Breach; and (vi) payment of costs for commercially reasonable credit reporting services that are associated with legally required notifications or are advisable under the circumstances.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a franchisee is required to cooperate with Belocal in the event of a security breach. Specifically, if a franchisee becomes aware of any actual or suspected unauthorized access, processing, loss, use, disclosure, alteration, destruction, transfer, or other compromise of personal information, or any suspected intrusion into the franchisee's or franchisor's IT systems, the franchisee must immediately notify Belocal.
The franchisee is obligated to cooperate with Belocal to investigate and remedy the security breach. Furthermore, unless required by law, the franchisee cannot make any public disclosure of the breach without Belocal's written authorization, including the form of the notice.
In addition to cooperating with investigations, the franchisee may be financially responsible for costs incurred by Belocal due to the security breach. The franchisee must reimburse Belocal for all reasonable Notification and Remediation Related Costs arising from any security breach directly or indirectly caused by the franchisee, its principals, or its independent staff. These costs include expenses related to notifications, communications, call center establishment, IT consultants, public relations, legal and accounting fees, and credit reporting services.