What is the minimum amount of Wind-Down Damages that Belocal can charge?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
. 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"). Franchisor shall have the right to deduct or withhold any Wind-Down Damages from Franchisee's Commissions or transfer the Wind-Down Damages by EFT from Franchisee to Franchiso
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the minimum amount for Wind-Down Damages is $2,500. These damages are not considered a penalty but rather a reasonable estimate of the losses Belocal would incur if a franchisee abandons the business before the agreement's expiration or fails to follow the proper wind-down procedures as outlined in the Franchise Brand Standards Manual. The actual Wind-Down Damages will be the greater of $2,500 or six months' worth of the average royalty the franchisee paid over the previous 12 months.
For a prospective Belocal franchisee, this means that upon termination or expiration of the franchise agreement, they must adhere to Belocal's wind-down procedures. Failure to do so, or abandoning the business prematurely, can result in these Wind-Down Damages. This is in addition to any other costs, expenses, and attorney's fees Belocal might incur to enforce these terms.
Belocal has the right to deduct or withhold any Wind-Down Damages from the franchisee's commissions or transfer the Wind-Down Damages by EFT from Franchisee to Franchisor. This clause highlights the importance of understanding and adhering to the franchise agreement's termination and wind-down clauses to avoid incurring these damages.