What are the potential Wind-Down Damages a Belocal franchisee might incur, and under what circumstances are these damages payable?
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 under specific circumstances related to the termination of their franchise agreement. These damages are designed to compensate Belocal if the franchisee fails to properly wind down the business according to the franchisor's procedures or if the franchisee abandons the franchised business altogether.
The amount of Wind-Down Damages is calculated as the greater of two figures: either six months' worth of the average royalty payments the franchisee made during the twelve months prior to the default, or a flat fee of $2,500. This means that a franchisee's potential liability could vary significantly depending on their royalty history. If the average monthly royalty was low, the $2,500 minimum might apply. However, for a more successful franchise location with higher royalties, the damages could be substantially more.
These Wind-Down Damages are payable on demand, meaning Belocal can require immediate payment if the franchisee triggers the conditions for these damages. It is important for a prospective Belocal franchisee to understand these potential costs and ensure they comply with all wind-down procedures outlined in the franchise agreement to avoid incurring these charges. Abandoning the business without proper notification and adherence to the franchisor's guidelines would also trigger these damages.