Does the Belocal Franchise Agreement contain a covenant not to compete that extends beyond the termination of the franchise, and is this provision potentially unenforceable under California law?

According to Belocal's 2025 Franchise Disclosure Document, the Franchise Agreement does contain a covenant not to compete that extends beyond the termination of the franchise. Item 22 of the FDD explicitly states this and also notes that this provision may not be enforceable under California law. This is a critical point for prospective franchisees in California to understand.

California law generally disfavors non-compete agreements, especially those that restrict a person's ability to work in their chosen profession after the franchise relationship ends. The FDD's acknowledgment of potential unenforceability suggests that Belocal is aware of this legal landscape. However, the extent to which the non-compete provision is actually unenforceable would likely depend on the specific terms of the agreement and how they are applied in practice.

For a prospective Belocal franchisee in California, this means the enforceability of the non-compete clause is uncertain. While the agreement includes such a clause, a California court might not uphold it. It is highly recommended that potential franchisees seek legal counsel to fully understand the implications of this clause and how it might affect their future business activities should they decide to leave the Belocal franchise system.