What are Belocal franchisees required to do regarding the wind-down of operations prior to a transfer or expiration of the Franchise Agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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- A. Prior to the closing of a transfer of the Franchised Business or expiration of this Agreement, 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 closing of the transfer or the expiration date. If Franchisee abandons the Franchised Business prior to the closing of the transfer or the expiration date 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 may 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.
- B. Upon the expiration or termination of this Agreement (including termination following transfer, if applicable), all rights granted to Franchisee hereunder shall immediately terminate, and Franchisee and its Principals must:
- (1) Immediately cease to conduct operations of the Franchised Business and cease holding themselves out as a franchisee (or a principal of a franchisee) of Franchisor (except for purposes of disclosing past experience on a resume);
- (2) Promptly discontinue all use of the Marks, Copyrighted Materials, and Confidential Information and take appropriate action to return to Franchisor, or deliver to the transferee if Franchisor so designates, all Copyrighted Materials and Confidential Information in Franchisee's possession or within its control;
- (3) Pay all amounts due under this Agreement;
- (4) Pay to Franchisor all damages, costs, and expenses, including reasonable attorney's fees and enforcement costs, incurred by Franchisor in connection with any of Franchisee's default(s) under this Agreement;
- (5) Comply with the covenants set forth in Section 7.;
- (6) At Franchisor's option, assign to Franchisor, or if applicable, the transferee, all rights, control, and access to any business listings and Online Presences (including accounts, credentials, and login information) and telephone numbers (including personal cellphone numbers) related to or associated with the Franchised Business and execute all forms and documents required by Franchisor to transfer such items to Franchisor or, if applicable, the transferee. Franchisee agrees to use different telephone numbers, business listings, and Online Presences in connection with any subsequent business conducted by Franchisee. Franchisor has the right to prohibit Franchisee's continued control of, use of, or access to such Online Presences;
- (7) Comply with Franchisor's instructions related to the Technology and Franchised Business Data;
- (8) Pay in full all of the creditors and suppliers of the Franchised Business and/or the Publication within 15 days after the expiration or termination of this Agreement; and
- (9) Pay to Franchisor all damages, costs, and expenses, including reasonable attorneys' fees and lost profits, incurred by Franchisor as a result of or subsequent to the termination or expiration of this Agreement, including costs and expenses related to obtaining injunctive or other relief for the enforcement of any provisions of this Section 11.
12. INSURANCE; INDEMNIFICATION; INDEPENDENT CONTRACTOR
- A. Insurance.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, prior to the closing of a transfer of the Franchised Business or the expiration of the Franchise Agreement, franchisees must comply with Belocal's instructions regarding the wind-down of operations. This includes following the wind-down procedures outlined in the Franchise Brand Standards Manual and cooperating in good faith with Belocal, its affiliates, and their representatives during the wind-down period, which may involve digital or in-person meetings if requested. Franchisees are obligated to continue operating the Franchised Business until the closing of the transfer or the expiration date. Failure to comply with these wind-down procedures or abandoning the business before the transfer or expiration date constitutes a default under the Franchise Agreement.
If a Belocal franchisee fails to comply with the wind-down procedures, Belocal may 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. Belocal has the right to deduct or withhold any Wind-Down Damages from the franchisee's commissions or transfer the Wind-Down Damages by EFT from the franchisee to Belocal. The franchisee is also responsible for paying all costs, expenses, and attorneys' fees incurred by Belocal in enforcing the terms and conditions of this provision.
Upon the expiration or termination of the Franchise Agreement, all rights granted to the franchisee immediately terminate. The franchisee must cease operations, discontinue all use of Belocal's Marks, Copyrighted Materials, and Confidential Information, and return or deliver all Copyrighted Materials and Confidential Information to Belocal or its transferee. Additionally, the franchisee must pay all amounts due under the agreement, including damages, costs, and expenses incurred by Belocal due to any defaults. The franchisee must also comply with covenants outlined in Section 7 of the agreement. At Belocal's option, the franchisee must assign all rights, control, and access to business listings, Online Presences, and telephone numbers related to the Franchised Business to Belocal or the transferee and use different contact information for any subsequent business. The franchisee must also comply with Belocal's instructions related to Technology and Franchised Business Data, pay all creditors and suppliers of the Franchised Business within 15 days after termination or expiration, and pay all damages, costs, and expenses incurred by Belocal as a result of the termination or expiration.