If the transferee of a Belocal franchise is a business entity, what must the transferee provide to the Franchisor?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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- (10) If transferee is a corporation, partnership, limited liability company, or other entity, the transferee must make all of the representations, warranties, and covenants in Section 7. as Franchisor may request and must provide evidence satisfactory to Franchisor that such representations, warranties, and covenants are true and correct as of the date of the transfer.
- C. By Franchisee Right of First Offer. If Franchisee or any of its Principals desires to transfer all or any part of its interests in this Agreement, Franchisee, or the Franchised Business before obtaining an offer from a buyer, Franchisee must send Franchisor an offer in writing ("Offer Notice") containing the exact terms and conditions on which Franchisee desires to transfer such interest in this Agreement, Franchisee, or the Franchised Business.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, if the transferee is a business entity such as a corporation, partnership, or limited liability company, they must fulfill specific requirements to gain approval for the franchise transfer. The transferee must make all the representations, warranties, and covenants outlined in Section 7 of the franchise agreement, as requested by Belocal. Additionally, the transferee must provide evidence that satisfies Belocal, demonstrating that these representations, warranties, and covenants are accurate and correct as of the transfer date.
Furthermore, if the transferee is a business entity, those principals of the transferee designated by Belocal must also execute the franchise agreement and guarantee its performance. This ensures that key individuals within the entity are personally committed to upholding the terms of the agreement. The new franchise agreement executed by the transferee will supersede the existing agreement and may contain different terms, including potentially higher fees. However, the transferee will not be required to pay an initial franchise fee.
These stipulations are in place to ensure that any entity taking over a Belocal franchise meets the franchisor's standards and is fully committed to the obligations of the franchise agreement. Prospective franchisees should carefully review Section 7 of the franchise agreement to understand the full scope of representations, warranties, and covenants required. Additionally, it is important to ascertain which individuals Belocal will designate as principals who must guarantee the agreement's performance, as this could impact the entity's leadership and financial responsibilities.