What obligations does the transferor of a Belocal franchise remain liable for after the transfer?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
(7) The transferor shall remain liable for all of its obligations to Franchisor under this Agreement incurred prior to the effective date of the transfer and must execute any and all instruments reasonably requested by Franchisor to evidence such liability;
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- Termination of Franchise Agreement; Survival of Certain Covenants and Obligations. Except as provided for in Section 9. of this Transfer Agreement, upon execution of this Transfer Agreement by Franchisor, the Franchise Agreement will terminate automatically; however, Transferor and Transferor Principals, and each of them, remain bound by, and must comply with, those provisions of the Franchise Agreement, which by their nature survive termination and include, but are not limited to, confidentiality, non-solicitation, and noncompetition; payment of debts and taxes; indemnification; and the post-term obligations set forth in Section 11. of the Franchise Agreement. Further, Transferor and Transferor Principals will remain bound by the dispute resolution provisions set forth in Section 14. of the Franchise Agreement.
a.
By Franchisor.
Except for the obligations set forth in this Transfer Agreement, Franchisor irrevocably and unconditionally releases, acquits, and forever discharges Transferor and each Transferor Principal ("Transferor Parties") from all actions, causes of action, suits, debts, liens, obligations, promises, liabilities, claims, rights, demands, damages, controversies, losses, costs, and expenses (including attorneys' fees and costs actually incurred), known or unknown, suspected or unsuspected, fixed or contingent, which Franchisor now has, owns, holds, claims to have, claims to own, or claims to hold, or at any time heretofore had owned, held, claimed to have, claimed to own, or claimed to hold against any Transferor Party arising out of or relating to the Franchise Agreement.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a transferor remains liable for specific obligations to Belocal even after the franchise is transferred. The transferor is still responsible for all obligations to Belocal that were incurred prior to the effective date of the transfer. To formalize this liability, the transferor must execute any documents reasonably requested by Belocal.
Furthermore, the transferor and their principals remain bound by provisions of the Franchise Agreement that, by their nature, survive termination. These include, but are not limited to, confidentiality, non-solicitation, and non-competition agreements, as well as the payment of debts and taxes, indemnification responsibilities, and post-term obligations as detailed in Section 11 of the Franchise Agreement. The transferor and their principals will also remain bound by the dispute resolution provisions outlined in Section 14 of the Franchise Agreement.
However, Belocal provides a release to the transferor, with exceptions. Except for the obligations specified in the Transfer Agreement, Belocal releases the transferor from all actions, claims, debts, and liabilities arising out of or relating to the Franchise Agreement. This release covers both known and unknown claims, providing a comprehensive discharge of responsibilities, except for the specific obligations that are explicitly retained in the transfer agreement.