What does the Principals' Undertaking require of the Principals regarding amounts owed by the Belocal franchisee?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) Principal agrees to jointly, individually, and severally become a surety and guarantor for the payment of all amounts Franchisee must pay under the terms of the Agreement, including under any indemnity.
Principal's liability under this undertaking shall be direct, immediate, and independent of the liability of, and shall be joint and several with, Franchisee and the other guarantors of Franchisee.
Principal shall render any payment or performance required under the Agreement upon demand if Franchisee fails or refuses punctually to do so.
Franchisor may proceed against Principal and Franchisee jointly and severally, or Franchisor may, at its option, proceed against Principal, without having commenced any action or obtained any judgment against Franchisee.
Principal agrees to pay all reasonable attorneys' fees and all costs and other expenses incurred in any collection or attempt to collect amounts due pursuant to this undertaking or any negotiations relative to the obligations hereby guaranteed or in enforcing this undertaking against Principal.
Principal consents and agrees that: (1) Principal's liability will not be contingent or conditioned upon Franchisor's pursuit of any remedies against the Franchisee or any other person; (2) Principal's liability will not be diminished, relieved, or otherwise affected by the Franchisee's insolvency, bankruptcy, or reorganization; the invalidity, illegality, or unenforceability of all or any part of the Agreement; or the amendment or extension of the Agreement with or without notice to the Principal; (3) Principal's liability shall not be diminished, relieved, or otherwise affected by any extension of time, credit, or other indulgence which Franchisor may grant to Franchisee or to any other person, including the acceptance of any partial payment or performance, or the compromise or release of any claims, none of
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 47–48)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the Principals' Undertaking requires that Principals act as sureties and guarantors for the payment of all amounts the Belocal franchisee owes under the terms of the Franchise Agreement, including any indemnity obligations. This means Principals are jointly, individually, and severally liable for the franchisee's debts to Belocal. The franchisor can pursue action against the Principal without first pursuing action against the franchisee.
The Principal's liability is direct, immediate, and independent of the franchisee's liability. If the franchisee fails to make a payment or perform as required, the Principal must fulfill the obligation upon demand. Belocal can proceed against both the Principal and the franchisee jointly or separately at its discretion, without needing to initiate action or obtain judgment against the franchisee first.
The Principal also agrees to cover all reasonable attorney's fees, costs, and expenses Belocal incurs while collecting amounts due under the undertaking or enforcing it against the Principal. The Principal's obligations are not contingent on Belocal pursuing remedies against the franchisee or any other person, nor are they affected by the franchisee's insolvency, bankruptcy, or the invalidity of the Franchise Agreement. The Principal's liability remains even if Belocal grants extensions of time or credit to the franchisee or compromises claims.
Furthermore, the Principal waives certain rights, including notice of demand for payment, protest, and notice of default. The Principal also waives the right to require Belocal to bring an action against the franchisee first and the defense of the statute of limitations. The Principal's Undertaking is governed by Texas law and is enforceable by and against the administrators, executors, successors, and assigns of the Principal, and the death of any Principal will not terminate the liability of such Principal or limit the liability of other Principals hereunder.