If a Test Publication is discontinued by Belocal, is there any penalty to the franchisor?
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 requests to operate a business associated with a Test Publication, and Belocal agrees, both parties will enter into a Franchise Agreement and a Test Publication Amendment. However, Test Publications may be discontinued by Belocal at any time without penalty to them and without any compensation to the franchisee, unless otherwise indicated in a state addendum to the franchise agreement. This is a key difference from standard Belocal (BL Business) publications.
This provision significantly impacts a franchisee considering a Test Publication. Unlike a standard Belocal franchise, there is no guarantee of the Test Publication's longevity. Belocal can discontinue the Test Publication at any time, potentially leaving the franchisee without the business they invested in. The franchisee will not receive any compensation from Belocal if this occurs.
It is important to note that the commissions from Test Publications are not included in the Item 19 financial performance representations. This means prospective franchisees cannot rely on the Item 19 data to project potential earnings from a Test Publication. Given the risk of discontinuation without compensation, and the lack of financial performance data, potential franchisees should carefully consider the risks associated with investing in a Belocal Test Publication.