Following the termination of a Belocal franchise agreement, which business advertisers are covenantors prohibited from soliciting?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
In order to protect the Confidential Information, the Marks, the goodwill of the System, and the legitimate business interests of the Franchised Business, Covenantor agrees that, for a period of two years following the earlier of (i) the termination of Covenantor's business relationship with Franchisee (regardless of the reason for such termination), or (ii) the termination, expiration, or transfer of Franchisee's interest in the Franchise Agreement (regardless of the reason for termination, expiration, or transfer), Covenantor will not, without Franchisor's prior written consent or as permitted under valid franchise agreements with Franchisor, solicit or attempt to solicit, using any form of oral, written, or electronic communications, Franchisor's, Franchisor's affiliate, or Franchisee's current or prospective business advertisers with whom Covenantor interacted during the twelve-month period prior to the termination of Covenantor's business relationship or the termination, expiration, or transfer of Franchisee's interest in the Franchise Agreement, for the purpose of soliciting, offering, or accepting Competitive Services.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, for two years after the termination of a covenantor's business relationship with a franchisee, the covenantor is prohibited from soliciting certain business advertisers. Specifically, the covenantor cannot solicit Franchisor's, Franchisor's affiliate, or Franchisee's current or prospective business advertisers. This restriction applies to advertisers with whom the covenantor interacted during the twelve-month period before the termination of the business relationship or the termination, expiration, or transfer of the Franchise Agreement. The purpose of this restriction is to prevent the covenantor from soliciting, offering, or accepting Competitive Services.
This non-solicitation clause is designed to protect Belocal's confidential information, trademarks, the goodwill of the system, and the legitimate business interests of the franchised business. It prevents a former covenantor from leveraging their knowledge and relationships gained during their time with Belocal to unfairly compete with the franchise. The clause applies regardless of the reason for the termination of the covenantor's business relationship with the franchisee or the termination, expiration, or transfer of the franchise agreement.
In practical terms, this means that a former covenantor must be very careful about contacting any advertisers they worked with during their last year with Belocal. Before reaching out to any potential clients, they need to determine if those clients are current or prospective advertisers of Belocal, its affiliates, or the franchisee. If so, and if the services being offered are competitive with Belocal's, then the covenantor is prohibited from soliciting them. This restriction is in place for two years, so it is a significant limitation on the covenantor's ability to work with those advertisers.
It is important to note that this restriction only applies to soliciting advertisers for Competitive Services. The 2025 Belocal FDD defines "Competitive Business" as including selling digital and/or print advertising to businesses for publication in or related to digital or print publications that compete with any N2 publication(s), including BELOCAL publications; publishing and/or facilitating the publishing of digital or print publications that compete with any N2 publication(s); and developing relationships among members of Communities within the Territory, or members of Industry Groups within the Territory and within ten miles of the Territory, for the purpose of selling or marketing digital or print publications that compete with any N2 publication(s), including BELOCAL publications.