Does the Belocal franchise agreement require Belocal to consider the franchisee's interests when making decisions?
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 is not explicitly required to consider the franchisee's interests when making decisions. Instead, Belocal retains the right to make decisions based on its own best interests and the interests of its franchise network.
Specifically, the franchise agreement states that Belocal may make decisions or exercise its rights based on its judgment of what benefits Belocal, including the broader franchise network, without necessarily considering whether those decisions are adverse to an individual franchisee's interests. This includes the ability to make decisions even if other reasonable alternatives exist or if the decision benefits Belocal financially.
The agreement also clarifies that Belocal will not be liable to the franchisee for any such decisions, and the exercise of Belocal's discretion is not subject to limitation or review. While the agreement acknowledges the potential applicability of a covenant of good faith and fair dealing, it stipulates that such a covenant should not imply any rights or obligations inconsistent with Belocal's right to make decisions that are not inconsistent with the franchisee's rights and obligations under the agreement. This indicates that Belocal prioritizes its own interests and the overall network's interests, even if those interests may not align with the individual franchisee's interests.