Is a Belocal franchisee prohibited from using artificial intelligence in their business operations?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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- (5) Except as permitted by and in accordance with the Franchise Brand Standards Manual, Franchisee is expressly prohibited from utilizing any form of artificial intelligence ("AI") in the operation, management, or marketing of the Franchised Business or the Publication without Franchisor's express written approval. This prohibition includes, but is not limited to, a prohibition on using AI-driven customer service, data analysis, image generation, text generation, code generation, sound generation, and decision-making tools. Any breach of this provision will be considered a material violation of this Agreement.
I. Disclosure and Franchisee's Investigation of this Franchise.
- (1) Franchisee understands and agrees that Franchisor may operate and change the System and Franchisor's business in any manner that is not expressly and specifically prohibited by this Agreement. Without limitation of the foregoing, Franchisee acknowledges that the products and services to be offered by Franchisee may be supplemented, improved, or otherwise modified from time to time by Franchisor.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, franchisees face restrictions on using artificial intelligence (AI) in their business. Specifically, Belocal franchisees are expressly prohibited from using any form of AI in the operation, management, or marketing of the franchised business or its publication without the franchisor's express written approval. This prohibition extends to AI-driven customer service, data analysis, image generation, text generation, code generation, sound generation, and decision-making tools.
This restriction means that a Belocal franchisee must seek and obtain written permission from Belocal before implementing any AI tools in their business. This requirement allows Belocal to maintain control over how AI is used within its franchise system, ensuring brand consistency and compliance with its standards. Failure to comply with this provision constitutes a material violation of the franchise agreement, which could lead to penalties or termination of the agreement.
Furthermore, Belocal retains ownership of all data used as input to and output from any AI tools, unless otherwise specified in Belocal's policies, procedures, and standards. Franchisees must also obtain Belocal's prior consent before using AI tools, including uploading franchised business data, in connection with the franchised business or publication. This stipulation underscores Belocal's emphasis on data governance and its right to oversee the integration of AI technologies within the franchise network. Prospective franchisees should carefully consider these restrictions and the potential impact on their operational flexibility and innovation.