If a Belocal franchisee assigns or transfers claims released under Section 1, what obligation does the franchisee have to the franchisor?

According to Belocal's 2025 Franchise Disclosure Document, a franchisee is obligated to indemnify, defend, and hold harmless the 'Releasees' (which include Belocal and its affiliates) from any claims arising out of the assignment or transfer of claims that were released under Section 1 of the franchise agreement. This means the franchisee is responsible for protecting Belocal from any legal actions or financial losses resulting from such an assignment or transfer. This obligation extends to all claims, costs, and expenses, including attorney's fees, that Belocal may incur due to the franchisee's actions.

This requirement ensures that Belocal is protected if a franchisee attempts to transfer claims that they have already released. The franchisee warrants that they have not assigned or transferred any claims released under Section 1. If this warranty is breached, the franchisee is liable for any resulting claims against Belocal. This provision is in place to prevent franchisees from circumventing the release agreement by assigning their claims to a third party.

For a prospective Belocal franchisee, this means understanding the scope of the claims released under Section 1 and ensuring that they do not assign or transfer any of those claims. If they do, they could be held financially responsible for defending Belocal against any resulting legal actions. This underscores the importance of carefully reviewing the franchise agreement and understanding the implications of the release and indemnity provisions.