Does the expiration or termination of the Belocal agreement release the Franchisee from all obligations?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
. The expiration, earlier termination, or exercise of Franchisor's rights pursuant to Section 10. of this Agreement shall not discharge or release Franchisee or any of the Principals from any liability or obligation
then accrued, or any liability or obligation continuing beyond, or arising out of, the expiration, the earlier termination, or the exercise of such rights under this Agreement. Additionally, Franchisee and the Principals shall pay all court costs and reasonable attorneys' fees and costs incurred by Franchisor in obtaining any remedy available to Franchisor for any violation of this Agreement.
- K. No Third-Party Beneficiary. Except as expressly provided to the contrary herein, nothing in this Agreement is intended to confer, nor shall anything in this agreement be deemed to confer, any rights or remedies under or as a result of this Agreement upon any person or legal entity other than Franchisee, Franchisor, the Indemnitees and such of Franchisee's and Franchisor's respective successors and assigns as may be contemplated (and, as to Franchisee, authorized by Section 9.).
- L. Further Assurances. The parties shall promptly execute and deliver such further documents and take such further action as may be necessary in order to effectively carry out the intent and purposes of this Agreement.
- M. Agreement Effective Upon Execution by Franchisor. This Agreement shall not become effective until signed by an authorized representative of Franchisor.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the expiration or termination of the Franchise Agreement does not automatically release the franchisee from all obligations. Certain obligations, by their nature, continue even after the agreement ends. These include, but are not limited to, confidentiality, non-solicitation, and non-competition agreements, as well as the payment of debts and taxes, indemnification responsibilities, and post-term obligations outlined in Section 11 of the Franchise Agreement.
Specifically, the franchisee is obligated to comply with wind-down procedures, potentially incurring 'Wind-Down Damages' if they abandon the business or fail to follow the prescribed procedures. These damages are calculated as the greater of six months' worth of the average royalty paid over the prior 12 months or $2,500. Belocal retains the right to deduct these damages from any commissions owed to the franchisee or to transfer the amount via EFT.
Furthermore, Belocal retains the right to effectuate the assignment of listings upon termination or expiration of the Franchise Agreement. The franchisee is obligated to pay all amounts owed in connection with these listings. The franchisee must also take necessary actions to transfer the listings to Belocal or its designated agent, install intercept messages, disconnect or modify listings, and provide access credentials as requested. Belocal is appointed as the franchisee's attorney-in-fact to facilitate these actions.
In the event of a transfer of the franchise, the outgoing franchisee remains bound by the provisions of the Franchise Agreement that survive termination, including those related to dispute resolution. Even with a release granted by Belocal in a transfer agreement, the franchisee may still have obligations set forth in the transfer agreement itself. Therefore, franchisees should carefully review all post-termination obligations and seek legal counsel to understand the full scope of their responsibilities upon expiration or termination of the Belocal Franchise Agreement.