What happens to Section 5.E.(3) of the Belocal Franchise Agreement regarding management and promotion of the franchised business?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
In promoting the Publication, Franchisee, its Principal(s), operations manager, and other representatives, must:
(1) Solicit contracts for print advertising in the Publication from advertisers and digital advertising services ("Advertising Contracts"), quoting prices and terms set by Franchisor or its affiliate (or otherwise approved by Franchisor in writing), and using the form contracts provided by Franchisor or its affiliate. To the fullest extent permitted by applicable law, Franchisor and/or its affiliate reserve the right to establish maximum, minimum, or other pricing requirements with respect to Advertising Contracts. Moreover, Franchisor or its affiliate shall have ultimate discretion regarding whether to enter into any Advertising Contract. All Advertising Contracts, or other contracts related to the Publication, must be between Franchisor or its affiliate and the applicable Community, Industry Group, or advertiser, and Franchisee shall not be a party to, or a third-party beneficiary of, any such Advertising Contract or any
other contract relating to the Publication. Additionally, all fees and amounts payable under the Advertising Contracts must be paid directly to Franchisor or its affiliate or their designee, as applicable, in accordance with the terms thereof, and Franchisee must not accept any payments from any Community, Industry Group, or advertiser, nor shall Franchisee make payments on behalf of any Community, Industry Group, or advertiser for any reason. Franchisor may terminate this Agreement for Franchisee's failure to comply with the requirements set forth in this Section 5.E.(1). Franchisee shall not enter into Advertising Contracts or any other contract related to the Publication on Franchisor or its affiliate's behalf, and Franchisor and its affiliates are party to any Advertising Contract or any other contract related to the Publication, not Franchisee or its Principals.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, Section 5.E.(3) of the Franchise Agreement is not directly detailed in the provided excerpts. However, Section 5.E.(1) discusses the franchisee's role in soliciting advertising contracts for the Belocal publication. Franchisees must solicit contracts for print and digital advertising using the prices and terms set (or approved) by Belocal. Belocal retains the right to set pricing requirements and has ultimate discretion on whether to enter into any advertising contract.
All advertising contracts must be between Belocal (or its affiliate) and the advertiser; the franchisee cannot be a party to these contracts. All fees payable under advertising contracts must be paid directly to Belocal or its affiliate, and the franchisee cannot accept payments from advertisers or make payments on their behalf. Failure to comply with these requirements may result in the termination of the franchise agreement.
Prospective Belocal franchisees should seek clarification from the franchisor regarding the specifics of Section 5.E.(3) and how it relates to their responsibilities in managing and promoting the franchised business. Understanding the full scope of Section 5.E, including item (3), is crucial for a franchisee to operate in compliance with the agreement and avoid potential termination.