What must a Belocal franchisee do if they wish to transfer their interest in the Franchised Business?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
. Franchisee shall not transfer or assign this Agreement without Franchisor's prior written consent. Any purported assignment or transfer, by operation of law or otherwise, made in violation of this Agreement shall be null and void and shall constitute a material breach under this Agreement. For purposes of this Agreement, the term "transfer" shall mean any issuance, sale, assignment, gift, pledge, mortgage or any other encumbrance, transfer by bankruptcy, transfer by judicial order, merger, consolidation share exchange, or transfer by operation of law or otherwise, whether direct or indirect, voluntary or involuntary. Any ownership or structural changes in Franchisee (including but not limited to, any merger; reorganization; transfer of shares, stock, or interests among owners; or issuance of additional shares or classes of stock or additional partnership interests) shall constitute and be deemed a transfer. If Franchisee wishes to transfer all or part of its interest in the Franchised Business or this Agreement or in substantially all of the assets of the Franchised Business, or if Franchisee or any Principal wishes to transfer any ownership interest in Franchisee, transferor and the proposed transferee must apply to Franchisor for its consent. Franchisee agrees to submit to Franchisor all information Franchisor may require in order to determine whether to approve a proposed transfer of the Franchised Business, and Franchisor agrees to notify Franchisee of its approval or disapproval within a reasonable period of time, not to exceed 30 days, after Franchisor has received all requested information relating to any proposed transfer of the Franchised Business. A marketing list, client list or potential client list may be transferred only to a transferee to whom Franchisee's rights and obligations under this Agreement are simultaneously being transferred in accordance with the terms hereof. If Franchisor does not exercise its rights under Section 9.C or Section 9.D, the decision as to whether to approve a proposed transfer shall be made by Franchisor in its sole discretion and shall include numerous factors deemed relevant by Franchisor. These factors may include, but shall not be limited to, the following:
- (1) Franchisee, its Principals, and its affiliates shall not be in default under this Agreement, or any other agreement with Franchisor or any of its affiliates, and shall have substantially and timely complied with all the terms and conditions of such agreements during their respective terms, including but not limited to having paid all amounts due;
- (2) Franchisor reserves the right to require Franchisee to prepare and furnish to the proposed transferee and/or Franchisor such financial reports and other data relating to the Franchised Business and the Publication as Franchisor deems reasonably necessary or appropriate for transferee and/or Franchisor to evaluate the Franchised Business, the Publication, and the proposed transfer. Franchisor may review all information regarding the Franchised Business and the Publication that Franchisee provides to the proposed transferee, correct any information that Franchisor believes to be inaccurate, and provide the proposed transferee with copies of any reports that Franchisee has provided to Franchisor or that Franchisor has made regarding the operation of the Franchised Business and/or the Publication. Franchisee Agrees that Franchisor shall have the right to confer with any proposed transferee and to furnish it with information concerning the Franchised Business, the Publication, and/or the proposed transfer without any liability to Franchisee, except for international misstatements made by Franchisor to transferee. Any information furnished by Franchisor to any proposed transferee shall be for the sole purpose of permitting the proposed transferee to evaluate the Franchised Business, the Publication, and/or the proposed transfer and must not be construed in any manner or form whatsoever as claims of success or failure of the Franchised Business, the Publication, and/or the proposed transfer;
- (3) The transferor and its principals, for themselves and on behalf of their respective guarantors, predecessors, affiliates, shareholders, members, partners, officers, directors, managers, employees, agents, representatives, attorneys, accountants, heirs, executors, administrators, successors, and assigns, if applicable, shall have executed a general release, in a form satisfactory to Franchisor, of any and all claims against Franchisor, Franchisor's predecessors and affiliates, their respective officers, directors, shareholders, partners, managers, members, agents, representatives, independent contractors, servants, employees, attorneys, accountants, guarantors, successors, and assigns, past and present, in their corporate and individual capacities, including, without limitation, claims arising under this Agreement and any other agreement with Franchisor or its affiliates, and under federal, state, or local laws, rules, and regulations or orders;
- (4) The proposed transferee shall have demonstrated to Franchisor's satisfaction that it meets Franchisor's then-current qualifications, and, at the transferee's expense, transferee and any of its principals and any other personnel required by Franchisor shall complete any training programs then in effect for N2 publication franchisees upon such terms and conditions as Franchisor may require;
- (5) The transferee shall enter into a written agreement, in a form satisfactory to Franchisor, whereby transferee shall assume full, unconditional, and joint-and-several liability for, and agree to perform from the date of the transfer, all obligations, covenants, and agreements of Franchisee under this Agreement. If the transferee is a corporation, partnership, limited liability company, or other entity, those of transferee's principals who are designated as principals by Franchisor must also execute such agreement and guarantee the performance thereof;
- (6) The transferee shall execute Franchisor's then-current form of franchise agreement for a term ending on the expiration date of this Agreement. The new franchise agreement shall supersede this Agreement in all respects, and its terms may differ from the terms of this Agreement, including higher fees, but the transferee shall not be required to pay an initial franchise fee.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a franchisee cannot transfer or assign their Franchise Agreement without the prior written consent of Belocal. Any attempt to do so without this consent is considered a material breach of the agreement and will be void.
If a Belocal franchisee wishes to transfer their interest in the franchised business, they must apply to Belocal for consent, along with the proposed transferee. The franchisee must submit all information Belocal requires to assess the proposed transfer. Belocal will then notify the franchisee of its decision (approval or disapproval) within a reasonable period, not exceeding 30 days, after receiving all the necessary information.
Before seeking an offer from a buyer, the franchisee must first send Belocal an offer in writing with the exact terms and conditions of the desired transfer. This is known as the 'Offer Notice.' Belocal then has the option to either accept this offer. If the franchisee receives an offer from a third party that differs materially from the initial Offer Notice, Belocal has the option to purchase the franchisee's interest under the terms of that third-party offer. If the franchisee seeks a buyer without first providing an Offer Notice, they must obtain a written offer with an earnest money deposit of at least 5% of the offering price and provide Belocal with a copy. Belocal has the right to investigate the business's records, including financial statements for the past three fiscal years, to assess the fairness of the transfer terms.
Even upon the death or disability of the franchisee or a principal, any transfer of interest is subject to these conditions. The executor or personal representative must transfer the interest to a Belocal-approved party within six months, or the agreement automatically terminates unless Belocal grants a written extension. In the event of a transfer, the transferor remains liable for all obligations to Belocal incurred before the transfer's effective date and must execute any documents Belocal reasonably requests to confirm this liability. The franchisee must pay Belocal a transfer fee equal to the current initial franchise fee for new franchisees, plus Belocal's attorney fees. All creditors and suppliers of the franchised business must be paid in full before the transfer. The transferee, if a business entity, must make all representations, warranties, and covenants requested by Belocal and provide evidence of their accuracy as of the transfer date.