What liabilities, damages, costs, and expenses is a Belocal franchisee responsible for paying if they default under the Franchise Agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
A. Default and Termination. Franchisee acknowledges that each of Franchisee's obligations described in this Agreement is a material and essential obligation; that nonperformance of such obligations will adversely and substantially affect Franchisor and the System; and that the exercise by Franchisor of the rights and remedies set forth herein is appropriate and reasonable. Franchisee agrees to pay to Franchisor all liabilities, damages, costs, and expenses, including reasonable attorney's fees, incurred by Franchisor in connection with any default by Franchisee under this Agreement.
(4) Pay to Franchisor all damages, costs, and expenses, including reasonable attorney's fees and enforcement costs, incurred by Franchisor in connection with any of Franchisee's default(s) under this Agreement;
(9) Pay to Franchisor all damages, costs, and expenses, including reasonable attorneys' fees and lost profits, incurred by Franchisor as a result of or subsequent to the termination or expiration of this Agreement, including costs and expenses related to obtaining injunctive or other relief for the enforcement of any provisions of this Section 11.
Therefore, Franchisee and Franchisor agree that a reasonable estimate of those damages (as liquidated damages and not as a penalty) is an amount equal to the greater of six months' worth of the average Royalty Franchisee paid for the prior 12 months or $2,500 ("Wind-Down Damages").
Franchisee shall pay all costs, expenses and attorneys' fees incurred by Franchisor in enforcing the terms and conditions of this provision.
Franchisee shall reimburse Franchisor and/or its affiliate for any costs Franchisor and/or its affiliate incur to enforce advertising contracts entered into in connection with the Publication.
Additionally, Franchisee shall reimburse Franchisor and/or its affiliates for the costs of any litigation related to the enforcement of advertising contracts entered into in connection with the Publication, including without limitation legal and court costs and reasonable attorneys' fees.
Franchisor shall retain 7% of any amounts collected by Franchisor, its affiliates, or any third-party collection agency to cover Franchisor's internal costs associated with processing collection requests, managing third-party collection agencies, and administering recoveries.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, if a franchisee defaults under the Franchise Agreement, they are responsible for specific financial obligations to Belocal. Belocal states that each obligation within the agreement is material and essential, and failure to meet these obligations will significantly impact Belocal and the franchise system. As such, the franchisee is responsible for paying all liabilities, damages, costs, and expenses, including reasonable attorney's fees, that Belocal incurs due to the franchisee's default.
In the event of termination or expiration of the agreement, the franchisee must pay all amounts due under the agreement and all damages, costs, and expenses, including reasonable attorney's fees and enforcement costs, that Belocal incurs due to the franchisee's defaults. The franchisee must also pay all damages, costs, and expenses, including reasonable attorneys' fees and lost profits, that Belocal incurs as a result of or after the termination or expiration of the agreement. This includes costs and expenses related to obtaining injunctive or other relief for the enforcement of any provisions.
Additionally, if the franchisee abandons the Belocal business or fails to comply with wind-down procedures, they will be charged Wind-Down Damages. These damages are the greater of six months' worth of the average royalty the franchisee paid for the prior 12 months or $2,500. The franchisee is also responsible for all costs, expenses, and attorneys' fees Belocal incurs in enforcing the terms and conditions related to the wind-down procedures. Furthermore, the franchisee is responsible for reimbursing Belocal for any costs incurred to enforce advertising contracts related to the Belocal publication, including legal and court costs and reasonable attorneys' fees. Belocal will retain 7% of any amounts collected from advertisers to cover internal costs associated with processing collection requests, managing third-party collection agencies, and administering recoveries.