What is the minimum amount of transfer damages a Belocal franchisee must pay for an unauthorized transfer?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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- F. Transfer Damages. If Franchisee or any of its Principals engages in a transfer without first complying with the applicable transfer provisions of this Agreement (including, without limitation, the provisions of this Section 9), Franchisee agrees to pay Franchisor, within 15 days of receiving notice from Franchisor, in addition to the amounts owed under this Agreement, transfer damages equal to the greater of (a) 15% of the price paid by the transferee to Franchisee or any Principal, as applicable; or (b) $25,000 ("Transfer Damages"). The parties to this Agreement acknowledge and agree that it would be impracticable to determine precisely the damages that Franchisor would incur from any unauthorized transfer of this Agreement. The parties consider this Transfer Damages provision to be a reasonable, goodfaith estimate of those damage
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a franchisee who engages in a transfer without complying with the transfer provisions of the agreement must pay transfer damages. These damages are equal to the greater of 15% of the price paid by the transferee or $25,000. Therefore, the minimum transfer damages a Belocal franchisee would have to pay for an unauthorized transfer is $25,000.
This clause is designed to protect Belocal from the potential harm caused by unapproved transfers, ensuring that the franchisor maintains control over who operates under their brand. The FDD states that the parties agree it would be impractical to determine precisely the damages Belocal would incur from an unauthorized transfer, and they consider this provision to be a reasonable, good-faith estimate of those damages.
For a prospective Belocal franchisee, this means it is critical to adhere to the outlined transfer procedures within the franchise agreement. Failure to do so could result in a significant financial penalty. Franchisees should carefully review and understand the transfer requirements to avoid triggering these transfer damages.