If the transferee of a Belocal franchise is a business entity, who else must execute the agreement and guarantee performance?

According to Belocal's 2025 Franchise Disclosure Document, if a Belocal franchise is being transferred to a corporation, partnership, limited liability company, or other entity, certain principals of the transferee must also execute the franchise agreement and guarantee its performance. These principals are specifically those designated as principals by Belocal.

This requirement ensures that Belocal has recourse to individuals with a vested interest in the transferee entity, not just the entity itself. By having designated principals personally guarantee the performance of the franchise agreement, Belocal aims to mitigate the risk of non-compliance or default by the transferee business entity. This is a common practice in franchising, as it provides an additional layer of security for the franchisor.

For a prospective Belocal franchisee, this means that if they plan to transfer their franchise to a business entity, they should be aware that certain individuals within that entity, as determined by Belocal, will need to personally guarantee the franchise agreement. This could impact the willingness of potential transferees to acquire the franchise, as it places personal liability on those designated principals. Franchisees should discuss this requirement with potential transferees early in the transfer process to ensure a smooth transaction.