What are the obligations of a Belocal franchisee regarding pre-opening purchases/leases (Item 9) in light of the restrictions on sources of products and services (Item 8)?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
| Obligation | Section in Agreement | Disclosure Document |
|---|---|---|
| Item | ||
| b. Pre-opening purchases/leases | Not applicable | Items 7, 8, and 11 |
You must comply with all of our standards and specifications relating to the purchase of all supplies, materials, equipment (including computer hardware and software), and other products and services used in the Franchised Business. We formulate our standards and specifications based on a variety of factors and can issue such standards and specifications to you from time to time, including in writing in the Franchise Brand Standards Manual. If we have approved suppliers for any supplies, products, and/or services used or offered by your Franchised Business, you must use those suppliers. We may change the number of approved suppliers at any time and may designate ourselves, an affiliate, or a third party as the exclusive source for any particular item or service. We may profit from your purchases and leases from approved suppliers, and we and/or our affiliates may receive payments, fees, commissions, or reimbursements from such suppliers in respect of your purchases and leases.
You must use the third-party provider we designate to purchase your business cards.
We require you to use our approved vendors for digital signature software. You must not use any digital signature software we have not approved.
You must obtain and maintain in full force and effect the levels of insurance specified in the Franchise Agreement and the Franchise Brand Standards Manual or applicable law. At a minimum, you must carry (i) Comprehensive General Liability Insurance, including broad-form contractual liability, broad-form property damage, personal injury, advertising injury, completed operations, products liability, and fire damage coverage, in the amount of $2,000,000 combined single limit per occurrence and $4,000,000 general aggregate; (ii) automobile liability coverage, including coverage of owned, non-owned, and hired vehicles, with coverage in amounts not less than $300,000 combined single limit; (iii) event insurance for each event you host or sponsor in connection with the Publication in the amount of $1,000,000 per occurrence, $2,000,000 in the aggregate, regardless of where the event is located; and (iv) such other insurance as may be required by the state or locality in which you operate the Franchised Business. All policies must be acceptable to us. From time to time in our sole discretion, we may increase or modify such limits of liability or require additional types of coverage. In each of these policies, except for workers' compensation (if applicable), you agree to name us and our affiliates, and the officers, directors, shareholders, partners, agents, representatives, independent contractors, servants, and employees of each of them, as additional insureds (each, an "Additional Named Insured"), which will expressly protect both you and each Additional Named Insured and will require the insurer to defend both you and each Additional Named Insured in any action while reserving the right of each Additional Named Insured to involve counsel of their own choosing in protection of their own and system-wide interests. Additionally, your insurance policy must waive on behalf of the insurer any right of subrogation by the insurance company against us, the Additional Named Insureds, our officers, shareholders, and employees. Your insurance must apply as primary and non-contributory.
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, franchisees have obligations regarding pre-opening purchases and leases, as detailed in Item 9, which are closely tied to the restrictions on sources of products and services outlined in Item 8. Specifically, Item 9 references Items 7, 8, and 11 in relation to pre-opening purchases/leases, indicating that franchisees must adhere to Belocal's standards and specifications when acquiring supplies, materials, and equipment.
Belocal franchisees are generally required to purchase supplies, materials, equipment, and services used in the franchised business according to Belocal's standards and specifications. Belocal formulates these standards and specifications based on various factors and can issue them from time to time, including in the Franchise Brand Standards Manual. If Belocal has approved suppliers, franchisees must use those suppliers. Belocal may change the number of approved suppliers and may designate itself, an affiliate, or a third party as the exclusive source for any particular item or service. Belocal may profit from franchisee purchases and leases from approved suppliers, and Belocal and/or its affiliates may receive payments, fees, commissions, or reimbursements from such suppliers.
While franchisees are not obligated to purchase or lease from Belocal, its affiliates, or designated third-party suppliers for most items, there are exceptions. For instance, franchisees must use Belocal's designated third-party provider for business cards and approved vendors for digital signature software. Additionally, franchisees must obtain and maintain specified levels of insurance coverage from acceptable policies, naming Belocal and its affiliates as additional insureds. Prospective Belocal franchisees should carefully review Items 7, 8, and 11 of the FDD, as well as the Franchise Brand Standards Manual, to fully understand the specific requirements and restrictions related to pre-opening purchases and leases, ensuring compliance with Belocal's standards and approved suppliers.