What happens if a Belocal franchisee, its Principals, or its affiliates have not paid all amounts due?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
These factors may include, but shall not be limited to, the following:
(1) Franchisee, its Principals, and its affiliates shall not be in default under this Agreement, or any other agreement with Franchisor or any of its affiliates, and shall have substantially and timely complied with all the terms and conditions of such agreements during their respective terms, including but not limited to having paid all amounts due;
(2) Franchisor reserves the right to require Franchisee to prepare and furnish to the proposed transferee and/or Franchisor such financial reports and other data relating to the Franchised Business and the Publication as Franchisor deems reasonably necessary or appropriate for transferee and/or Franchisor to evaluate the Franchised Business, the Publication, and the proposed transfer.
Franchisor may review all information regarding the Franchised Business and the Publication that Franchisee provides to the proposed transferee, correct any information that Franchisor believes to be inaccurate, and provide the proposed transferee with copies of any reports that Franchisee has provided to Franchisor or that Franchisor has made regarding the operation of the Franchised Business and/or the Publication.
Franchisee Agrees that Franchisor shall have the right to confer with any proposed transferee and to furnish it with information concerning the Franchised Business, the Publication, and/or the proposed transfer without any liability to Franchisee, except for international misstatements made by Franchisor to transferee.
Any information furnished by Franchisor to any proposed transferee shall be for the sole purpose of permitting the proposed transferee to evaluate the Franchised Business, the Publication, and/or the proposed transfer and must not be construed in any manner or form whatsoever as claims of success or failure of the Franchised Business, the Publication, and/or the proposed transfer;
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, failure to pay amounts due can trigger several consequences for the franchisee, its Principals, and its affiliates. Specifically, if the franchisee, its Principals, and its affiliates are not in default under the Franchise Agreement or any other agreement with Belocal or its affiliates, and have substantially and timely complied with all terms and conditions of such agreements during their respective terms, including having paid all amounts due, this is a factor that Belocal considers when a franchisee wants to transfer the franchise.
Additionally, if a Belocal franchisee fails to pay when due any fee, expense, charge, or other amount due and owing to any supplier or creditor of the franchisee, this constitutes a breach of the Franchise Agreement. In cases where the franchisee has not paid all amounts due, Belocal has the right to deduct or withhold any fees assessed or amounts due from the franchisee's commissions. This means that Belocal can offset outstanding payments against any commissions that the franchisee would otherwise receive.
Furthermore, the Principal of a Belocal franchise agrees to act as a surety and guarantor for the payment of all amounts the franchisee must pay under the terms of the agreement, including any indemnity. This obligation is direct, immediate, and independent of the franchisee's liability, making the Principal jointly and severally liable with the franchisee. Belocal can proceed directly against the Principal to collect any amounts due without first pursuing action against the franchisee. The Principal is also responsible for covering all reasonable attorneys' fees and costs associated with collecting amounts due under this guarantee.