Does Belocal need the consent of the Franchisee or any Principal to reduce the scope of any covenant?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee and Principals further understand and agree that Franchisor shall have the right, in its sole discretion, to reduce the scope of any covenant set forth in this Section 7., or any portion thereof, without the consent of Franchisee or any
Principal, effective immediately upon notice to Franchisee or Principals, and Franchisee and Principals agree that they will promptly comply with any covenant as so modified. The time periods set forth in this Section 7 will be tolled for any period of noncompliance.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, Belocal has the authority to modify the scope of any covenant without needing approval or consent from the franchisee or any principal involved. Belocal can implement such changes immediately after providing notice to the franchisee or principals. Franchisees and principals are then obligated to adhere to the revised covenant terms promptly.
This unilateral right held by Belocal gives it considerable flexibility in adjusting the contractual obligations of franchisees and their principals. These covenants typically address non-compete clauses, confidentiality, and other operational restrictions. The FDD specifies that the time periods outlined in Section 7 will be suspended for any period of noncompliance.
For a prospective Belocal franchisee, this means that the terms of their franchise agreement, specifically the covenants, can be altered by Belocal at any time. It is crucial for potential franchisees to fully understand the implications of these covenants and how they might change over time. This includes assessing the potential impact on their business operations and future opportunities. Franchisees should seek clarification from Belocal regarding the circumstances under which these covenants might be modified and what recourse they have if they disagree with the changes.
This level of franchisor control is not uncommon, but franchisees should carefully evaluate the potential impact on their business. Understanding the specific covenants and the potential for their modification is an essential part of the due diligence process before investing in a Belocal franchise.