Does the Belocal franchise agreement allow Belocal to make decisions that are adverse to the franchisee's interests?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) Whenever Franchisor has expressly reserved in this Agreement, or is deemed to have a right and/or discretion to take or withhold an action, or to grant or decline to grant Franchisee a right to take or withhold an action, then except as otherwise expressly and specifically provided in this Agreement, Franchisor may make its decision or exercise its right and/or discretion on the basis of Franchisor's judgment of what is in Franchisor's best interests, including, without limitation, Franchisor's judgment of what is in the best interests of Franchisor's franchise network at the time Franchisor's decision is made or Franchisor's right or discretion is exercised, without regard to whether: (i) other reasonable alternative decisions or actions could have been made by Franchisor; (ii) Franchisor's decision or the action Franchisor takes promotes its financial or other individual interest; (iii) Franchisor's decision or the action Franchisor takes applies differently to Franchisee and one or more other franchisees or Franchisor's internal operations or its affiliates' operations; or (iv) Franchisor's decision or the exercise of Franchisor's right or discretion is adverse to Franchisee's interests.
In the absence of an applicable statute, Franchisor shall have no liability to Franchisee for any such decision or action.
Franchisor and Franchisee intend that the exercise of Franchisor's right or discretion shall not be subject to limitation or review.
If applicable law implies a covenant of good faith and fair dealing in this Agreement, Franchisor and Franchisee agree that such covenant shall not imply or impute any rights or obligations that are inconsistent with a fair construction of the terms of this Agreement and that this Agreement grants Franchisor the right to make decisions, take actions, and/or refrain from taking actions not inconsistent with Franchisee's rights and obligations hereunder.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, Belocal retains the right to make decisions based on its best interests, even if those decisions are adverse to the franchisee's interests. Specifically, Belocal can make decisions or exercise its rights based on its judgment of what benefits Belocal's franchise network, irrespective of whether alternative decisions could have been made or if the decision differently impacts franchisees.
This latitude extends to modifying the products and services offered by franchisees. Belocal is not liable to the franchisee for such decisions or actions, provided there isn't an applicable statute preventing it. The franchise agreement specifies that Belocal's discretion is not subject to limitation or review.
While the agreement includes a covenant of good faith and fair dealing, it clarifies that this covenant does not override Belocal's right to make decisions and take actions that are consistent with the franchisee's rights and obligations. This means that Belocal has significant power to make operational and strategic choices that could affect a franchisee's business, highlighting a potential risk for franchisees who may find themselves subject to decisions not in their direct benefit.