Is the Belocal franchisor obligated to consent to a franchisee's request for mutual termination?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
- F.
Consent to Mutual Termination.
Franchisee may request mutual termination during the Term of this Agreement.
Franchisor has no obligation to consent to such mutual termination.
If, in Franchisor's sole discretion, Franchisor consents to mutual termination, Franchisor may establish the termination date, which date shall be no earlier than fifteen days, and no later than ninety days, after the date Franchisor receives Franchisee's request for mutual termination.
Franchisor shall give Franchisee at least three days prior notice of the effective date of termination.
Franchisor, in its sole discretion and for any reason and no reason, has the right to accelerate the wind-down period and terminate this Agreement earlier than the termination date initially communicated to Franchisor, subject to the three days prior notice requirement, unless Franchisor has the right to immediately terminate this Agreement due to a default by Franchisee.
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.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, Belocal is not obligated to consent to a franchisee's request for mutual termination. The FDD states that a franchisee may request mutual termination during the term of the agreement, but Belocal has no obligation to grant it. This means that Belocal has the sole discretion to decide whether or not to allow a franchisee to terminate the agreement early through mutual consent.
If Belocal does consent to mutual termination, it has the right to establish the termination date. This date must be no earlier than fifteen days and no later than ninety days after the date Belocal receives the franchisee's request. Belocal must also give the franchisee at least three days' prior notice of the effective date of termination. However, Belocal retains the right to accelerate the wind-down period and terminate the agreement earlier than initially communicated, provided they give three days' notice, unless the termination is due to a franchisee default, in which case immediate termination may be possible.
During the period between fifteen days of the franchisee's request and the effective termination date set by Belocal, the franchisee must follow Belocal's instructions for winding down operations. This includes complying with wind-down procedures in the Franchise Brand Standards Manual and cooperating in good faith with Belocal and its representatives, including attending digital or in-person meetings if requested. This highlights the importance of maintaining a good working relationship with Belocal, even when seeking to exit the franchise agreement.
This lack of obligation for Belocal to consent to mutual termination is a significant point for potential franchisees to consider. It underscores the importance of carefully evaluating the franchise opportunity and ensuring long-term commitment, as exiting the agreement early may not be easily achieved through mutual consent. Prospective franchisees should discuss the conditions under which Belocal might consider a mutual termination and what factors could influence their decision.