If a Belocal franchisee terminates the agreement, what kind of obligations are they subject to?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| manipulates, corrupts, or improperly modifies the IT Systems or any data stored therein; or (iv) transfers, copies, or discloses any data from the IT Systems except as expressly permitted under the Franchise Agreement; other defaults that are incapable of being cured. A provision in the Franchise Agreement which terminates the Franchise Agreement upon your bankruptcy may not be enforceable under Title 11, United States Code Section 101. Franchisor has a step-in right upon default. | ||
| i. Franchisee's obligations on termination/nonrenewal | Sections 7. and 11. | Comply with wind-down obligations; pay us wind-down damages, if applicable; stop using our Marks, Copyrighted Materials, and confidential information; return the Franchise Brand Standards Manual and Copyrighted Materials; stop operating the Franchised Business and do not represent yourself as a current franchisee; pay amounts due; at our option, assign to us your business directory listings and the Online Presences; grant us control of any Online Presence; comply with our instructions regarding the Technology and Franchised Business Data; comply with confidentiality, non- competition, and non solicitation covenants; pay us all costs, damages, and expenses we incur because of your defaults or resulting from or subsequent to the termination of the agreement (including enforcement of provisions). |
| j. | Section 9.A. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 49–55)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a franchisee who terminates the franchise agreement is subject to certain wind-down and post-termination obligations. These obligations are governed by Sections 7 and 11 of the Franchise Agreement.
Specifically, the franchisee must comply with wind-down requirements. Additionally, for two years after the termination of the Franchise Agreement, the franchisee and their Principals are restricted from engaging in competitive business activities. This includes owning, operating, or managing a competitive business; providing competitive services; or performing activities that could involve the use or disclosure of confidential information.
Furthermore, the franchisee is prohibited from soliciting or attempting to solicit certain advertisers. These non-competition covenants are detailed in Section 7.DE of the Franchise Agreement. The provisions regarding termination are subject to state law.