If Belocal exercises its right to limit or remove services, is this considered a constructive termination of the franchise agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisor shall have the right, but not the obligation, to temporarily or permanently limit or remove certain services or benefits provided by Franchisor or Franchisor's affiliates, or required to be provided by Franchisor, to Franchisee hereunder in lieu of exercising its right to terminate this Agreement, including, without limitation, eliminating any Online Presences associated with the Publication or the Franchised Business, restricting or removing Franchisee's right to purchase products directly or indirectly from Franchisor or its affiliates, limiting Franchisor's advertising and promotional assistance, restricting or removing Franchisee's right to use Franchisor's Software Programs or Franchisor-provided Technology, if any, and publishing the Publication.
Nothing in this Section constitutes a waiver of any other right or remedy of Franchisor under this Agreement or at law.
Franchisee acknowledges that Franchisor's exercise of its rights pursuant to this Section 10.H. shall not be deemed a constructive termination.
Any services or benefits removed or limited pursuant to this Section 10.H. may be reinstated at any time in Franchisor's sole discretion.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the franchisor has the right to limit or remove certain services or benefits in lieu of terminating the agreement. These services can be limited either temporarily or permanently. Examples of such limitations include eliminating online presence, restricting the right to purchase products from Belocal, limiting advertising assistance, or restricting the use of Belocal's software programs.
The FDD explicitly states that Belocal's exercise of its rights to limit or remove services will not be deemed a constructive termination of the franchise agreement. This means that even if Belocal significantly reduces the services it provides to a franchisee, the franchisee cannot claim that the franchise agreement has been effectively terminated.
This clause is important for prospective franchisees to understand. Belocal retains the power to alter the level of support and services provided without triggering a termination scenario. Franchisees should consider the potential impact of such limitations on their business and clarify with Belocal what circumstances might lead to such limitations and what recourse, if any, a franchisee has in such a situation.