If a Test Publication is discontinued by Belocal, is there any compensation to the franchisee?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
From time to time, we may test other publications to determine, among other things, the viability and financial parameters of the publication. If you request to operate a business associated with a test publication that is not a BL Business publication ("Test Publication"), and we agree, then you and we will enter into the Franchise Agreement and the Test Publication Amendment, which is Attachment H to the Franchise Agreement. All information relating to the BL Business in this disclosure document applies to the Test Publications, except that (1) unless otherwise indicated in a state addendum to the franchise agreement, Test Publications may be discontinued at any time we determine without any penalty to us and without any compensation to you, and (2) Test Publication Commissions are not included in the Item 19 financial performance representations. A franchise owner who operates a BL Business may be qualified to operate a second business and facilitate the publishing for a Test Publication business but is not required to do so. We do not require the owner of Test Publication business to also operate a BL Business. BL Businesses and Test Publication businesses are each a "Franchised Business" as that term is used in this disclosure document. From November 2017 until October 2024, franchisees who facilitated publication for Test Publications did so under the REAL PRODUCERS® franchise disclosure document. Now franchisees who facilitate publication for Test Publications do so under the BeLocal® franchise disclosure document. As of
Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES (FDD pages 8–12)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, if a franchisee operates a business associated with a Test Publication, and Belocal discontinues that Test Publication, the franchisee will not receive any compensation. Belocal can discontinue Test Publications at any time without penalty to them. This is explicitly stated in the Test Publication Amendment, which is Attachment H to the Franchise Agreement.
This lack of compensation in the event of discontinuation is a significant risk for franchisees considering investing in a Test Publication. Unlike a standard Belocal business, where presumably the franchisee would continue to operate unless they breach the agreement, a Test Publication can be shut down at Belocal's discretion, potentially leaving the franchisee with no recourse for their initial investment and lost income.
Prospective franchisees should carefully consider this risk and weigh it against any potential benefits of operating a Test Publication. It would be prudent to inquire with Belocal about the criteria used to evaluate Test Publications, the typical lifespan of such publications, and the likelihood of discontinuation. Understanding these factors can help a franchisee make a more informed decision about whether to invest in a Test Publication franchise.