For how long after termination of a business relationship with a Belocal franchisee is a covenantor prohibited from soliciting business advertisers?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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- In order to protect the Confidential Information, the Marks, the goodwill of the System, and the legitimate business interests of the Franchised Business, Covenantor agrees that, for a period of two years following the earlier of (i) the termination of Covenantor's business relationship with Franchisee (regardless of the reason for such termination), or (ii) the termination, expiration, or transfer of Franchisee's interest in the Franchise Agreement (regardless of the reason for termination, expiration, or transfer), Covenantor will not, without Franchisor's prior written consent or as permitted under valid franchise agreements with Franchisor, solicit or attempt to solicit, using any form of oral, written, or electronic communications, Franchisor's, Franchisor's affiliate, or Franchisee's current or prospective business advertisers with whom Covenantor interacted during the twelve-month period prior to the termination of Covenantor's business relationship or the termination, expiration, or transfer of Franchisee's interest in the Franchise Agreement, for the purpose of soliciting, offering, or accepting Competitive Services.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a covenantor is restricted from soliciting business advertisers for a period of two years after the termination of their business relationship with the franchisee. This restriction applies regardless of the reason for the termination. The non-solicitation clause aims to protect Belocal's confidential information, trademarks, the goodwill of the system, and the legitimate business interests of the franchised business.
Specifically, the covenantor is prohibited from soliciting or attempting to solicit, through any form of communication, Belocal's or the franchisee's current or prospective business advertisers. This applies to advertisers with whom the covenantor interacted during the twelve-month period before the termination. The purpose of this restriction is to prevent the covenantor from soliciting, offering, or accepting competitive services.
This post-term non-solicitation agreement is a standard practice in franchising to safeguard the franchisor's and franchisee's business interests. It prevents individuals who had access to sensitive information and relationships during their association with the franchise from leveraging that knowledge to unfairly compete after their departure. For a prospective Belocal franchisee, this means that any individual in a business relationship with them (a covenantor) will be legally bound to refrain from soliciting their advertisers for two years after their relationship ends, providing a level of protection for their advertising client base.