What are the potential financial implications if a Belocal franchisee fails to comply with wind-down procedures or abandons the Franchised Business, specifically regarding Wind-Down Damages?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Management Fee | 45% of monthly Cash Received, plus any expenses we incur in managing the Franchised Business | Monthly | Only payable in the event we must operate your franchise due to death, disability, defaults etc. The Management Fee is in addition to other fees due to us. |
| Customer Complaint Fee | Our costs and expenses associated with our response to and any resolution of a complaint | On demand | If an advertiser, client, or third party complains to us and you fail to satisfactorily remedy the complaint, you will pay us our costs and expenses associated with our response to and any resolution of the complaint. |
| Wind-Down Damages | An amount equal to the greater of (a) 6 months’ worth of the average Royalty you paid for the 12 months prior to the default or (b) $2,500 | On demand | Only payable if you fail to comply with the wind-down procedures or abandon the Franchised Business. |
| Transfer Damages | Greater of 15% of transfer price or $25,000 | Within 15 days of our demand | You will pay these transfer damages if you do not comply with the transfer terms under the Franchise Agreement. |
Source: Item 6 — OTHER FEES (FDD pages 14–31)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a franchisee may incur Wind-Down Damages if they fail to comply with the wind-down procedures or abandon their Belocal franchised business. These damages are designed to compensate Belocal for losses incurred due to the franchisee's non-compliance or abandonment.
The amount of the Wind-Down Damages is calculated as the greater of two amounts: either six months' worth of the average Royalty payments the franchisee made during the 12 months prior to the default, or a flat fee of $2,500. This means that even if a franchisee's Royalty payments were low, they would still be liable for at least $2,500. The Wind-Down Damages are due on demand from Belocal.
This fee could be substantial, especially for franchisees who had higher average Royalty payments in the year leading up to the default or abandonment. It is important for prospective Belocal franchisees to understand these potential costs and to carefully review the wind-down procedures outlined in the Franchise Agreement to avoid incurring these damages. Franchisees should also consider the implications of abandoning the business, as this will also trigger the Wind-Down Damages fee.