Does Belocal need to provide prior notice before changing the Cross-Selling Fee?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Any time during the Term of this Agreement, with no prior notices unless otherwise required by law, Franchisor reserves the right to change the Cross-Selling Fee to be calculated as follows:
- (i) The Selling Franchisee would receive an Outgoing Cross-Selling Fee equal to 10% of the monthly Cash Received for each print advertisement sold by the Selling Franchisee that will be included in the publication managed by the Receiving Franchisee.
- (ii) The Managing Franchisee (as defined by Franchisor's then-current Franchise Brand Standards Manual) would receive a Managing Cross-Selling Fee equal to 30% of the monthly Cash Received for each print advertisement, less the Royalty of 15% of the Cash Received.
- (iii) The Receiving Franchisee would receive a Receiving Cross-Selling Fee equal to 60% of the monthly Cash Received for that print advertisement, less the Publication Expenses.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, Belocal has the right to change the Cross-Selling Fee at any time during the term of the agreement. Unless otherwise required by law, Belocal is not obligated to provide prior notice before making such changes.
Currently, the Cross-Selling Fees are structured such that the Selling Franchisee receives 25% of the monthly cash received for each print advertisement sold that is included in the publication managed by the Receiving Franchisee. The Receiving Franchisee receives 75% of the monthly cash received for that print advertisement, less a royalty of 15% of the cash received and publication expenses.
Belocal reserves the right to modify this fee structure, potentially altering the percentages allocated to the Selling Franchisee, Managing Franchisee, and Receiving Franchisee. For example, the Selling Franchisee's share could decrease to 10%, while a Managing Franchisee could receive 30% (less royalty), and the Receiving Franchisee could receive 60% (less publication expenses). This change could impact the profitability of cross-selling activities for franchisees, depending on their role in the process.
Prospective franchisees should be aware that Belocal retains considerable flexibility in adjusting the Cross-Selling Fee structure, which could affect their revenue from cross-selling. It would be prudent to discuss with Belocal the circumstances under which such changes might be implemented and how they could impact a franchisee's earnings.