What is the obligation of a Belocal franchisee regarding cross-selling fees when selling print advertising for the Publication?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee agrees and acknowledges that any Selling Franchisee that sells print advertising for the Publication shall be entitled to receive Franchisor's then-current Outgoing Cross-Selling Fee, and Franchisee shall be entitled to receive Franchisor's then-current Receiving Cross-Selling Fee. Further, if Franchisee sells print advertising for a publication that is the responsibility of another franchisee, then Franchisee shall be eligible to receive Franchisor's then-current Outgoing Cross-Selling Fee for such sale(s), as set forth in the Franchise Brand Standards Manual, provided Franchisee complies with Franchisor's then-current policies, procedures, and guidelines related to cross-selling. Franchisor shall have the right to terminate Franchisee's right to cross-sell or this Agreement if Franchisee fails to comply with Franchisor's policies, procedures, and guidelines related to cross-selling. Currently, the Cross-Selling Fees are calculated as follows:
- (i) The Selling Franchisee will receive an Outgoing Cross-Selling Fee equal to 25% 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 Receiving Franchisee will receive a Receiving Cross-Selling Fee equal to 75% of the monthly Cash Received for that print advertisement, less the Royalty of 15% of the Cash Received and the Publication Expenses.
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.
Notwithstanding the foregoing or anything to the contrary herein, in the event an advertiser on a cross-sold account (i) is permitted by Franchisor to terminate its Advertising Contract with Franchisor prior to the end of the term of such Advertising Contract and (ii) pays an early termination fee ("Early Termination Fee") in connection with such early termination, each of the Selling Franchisee and the Receiving Franchisee shall receive 50% of such Early Termination Fee.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, franchisees are obligated to adhere to the franchisor's policies, procedures, and guidelines related to cross-selling. If a Belocal franchisee sells print advertising for a publication managed by another franchisee, they are eligible to receive the franchisor's current Outgoing Cross-Selling Fee, as detailed in the Franchise Brand Standards Manual. However, failure to comply with Belocal's cross-selling policies can result in the termination of the franchisee's right to cross-sell or even the franchise agreement itself.
Currently, the cross-selling fees are structured such that the Selling Franchisee receives an Outgoing Cross-Selling Fee equal to 25% of the monthly cash received for each print advertisement sold that will be included in the publication managed by the Receiving Franchisee. The Receiving Franchisee, on the other hand, receives a Receiving Cross-Selling Fee equal to 75% of the monthly cash received for that print advertisement, less the 15% royalty on the cash received and the publication expenses.
Belocal retains the right to change the cross-selling fee structure at any time during the term of the agreement, without prior notice unless required by law. Under a changed structure, the Selling Franchisee would receive 10% of the monthly cash received, the Managing Franchisee would receive 30% of the monthly cash received less the 15% royalty, and the Receiving Franchisee would receive 60% of the monthly cash received less publication expenses. This flexibility allows Belocal to adjust the commission structure as needed, which could impact the profitability of cross-selling for franchisees.
In the event an advertiser terminates their advertising contract early and pays an early termination fee, both the Selling Franchisee and the Receiving Franchisee will each receive 50% of that Early Termination Fee. This provides an additional incentive for franchisees to engage in cross-selling and maintain strong relationships with advertisers. Franchisees should familiarize themselves with the Franchise Brand Standards Manual to fully understand the current policies, procedures, and guidelines related to cross-selling, as these are subject to change and compliance is mandatory.