What are the Belocal franchisee's obligations regarding wind-down procedures if the franchisor requests mutual termination?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
During the period that is between fifteen days of the Franchisee's request and the effective termination date established by Franchisor, Franchisee shall comply with Franchisor's instructions regarding the wind-down of Franchisee's operations, comply with the wind-down procedures in the Franchise Brand Standards Manual, and cooperate in good faith with Franchisor, its affiliates, and their representatives during the wind-down period, including meeting digitally or in-person if requested.
For the avoidance of doubt, Franchisee has an obligation to continue to operate the Franchised Business until the effective date of termination.
If Franchisee abandons the Franchised Business prior to the effective date of termination established by Franchisor or fails to comply with the wind-down procedures in the Franchise Brand Standards Manual, Franchisee shall be in default under this Agreement and Franchisor shall have the right to immediately terminate this Agreement and charge the Wind-Down Damages.
Franchisee shall pay all costs, expenses and attorneys' fees incurred by Franchisor in enforcing the terms and conditions of this provision.
Nothing contained herein shall be construed as prohibiting Franchisor from additionally pursuing any other remedies which may be available to Franchisor for a breach.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, if the franchisor consents to mutual termination, the franchisee must comply with specific wind-down procedures. The franchisor establishes the termination date, which will be between 15 and 90 days after receiving the franchisee's request for mutual termination, and must give the franchisee at least three days' notice of the effective termination date. However, Belocal has the right to accelerate the wind-down period with only three days' notice, unless the termination is due to the franchisee's default.
During the period between 15 days of the franchisee's request and the effective termination date, the franchisee must follow Belocal's instructions regarding winding down operations. This includes complying with the wind-down procedures outlined in the Franchise Brand Standards Manual and cooperating in good faith with Belocal, its affiliates, and their representatives. Cooperation may involve digital or in-person meetings if requested by Belocal.
For the avoidance of doubt, the franchisee has an obligation to continue to operate the Franchised Business until the effective date of termination. Failure to comply with these wind-down procedures or abandoning the business before the termination date constitutes a default under the Franchise Agreement. In such cases, Belocal has the right to immediately terminate the agreement and charge Wind-Down Damages. These damages are defined as the greater of six months' worth of the average Royalty the franchisee paid for the prior 12 months or $2,500.
The franchisee is also responsible for all costs, expenses, and attorneys' fees incurred by Belocal in enforcing the terms and conditions related to the wind-down process. These obligations are in addition to any other remedies Belocal may pursue for a breach of the agreement. Therefore, it is crucial for a prospective Belocal franchisee to understand and adhere to these wind-down procedures to avoid potential penalties and legal repercussions.