What happens if a Belocal franchisee abandons the franchised business?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
. 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.
- G. Step-In Rights. In addition to Franchisor's right to terminate this Agreement, and not in lieu of such right, or any other rights Franchisor may have against Franchisee, upon a failure by Franchisee or any Principal to comply with any of the requirements of this Agreement, or upon a failure to cure any default within the applicable time period (if any), Franchisor shall have the right, but not the obligation, to assume management of the Franchised Business (or appoint a party to assume its management) until such time as Franchisor determines that the default has been cured and Franchisee is otherwise in compliance with this Agreement, or until Franchisor determines it will no longer exercise its step-in right. The terms and conditions for the exercise of Franchisor's step-in right are set forth in Section 12.E.
- H. Limitation of Services or Benefits.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a franchisee has an obligation to continue operating the franchised business until the effective date of termination. If a Belocal franchisee abandons the franchised business before the termination date, Belocal will consider this a default of the Franchise Agreement.
Belocal has the right to immediately terminate the agreement and charge "Wind-Down Damages." These damages are considered a reasonable estimate of the losses Belocal would incur, and are not considered a penalty. The Wind-Down Damages are the greater of six months' worth of the average Royalty the franchisee paid for the prior 12 months or $2,500. Belocal can deduct or withhold any Wind-Down Damages from the franchisee's commissions or transfer the Wind-Down Damages by EFT from franchisee to Belocal.
In addition to terminating the agreement and charging damages, Belocal retains the right to pursue any other available legal remedies for the breach. Belocal also has the right, but not the obligation, to assume management of the franchised business (or appoint a party to assume its management) until the default is cured, or until Belocal decides it will no longer exercise its step-in right.