Prior to or upon closing of a Belocal franchise transfer, what payments must the franchisee make?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
(8) Upon application for consent, Franchisee must pay Franchisor a transfer fee in an amount equal to the then-current initial franchise fee that Franchisor generally charges to new franchisees, plus Franchisor's reasonable attorneys' fees incurred in connection with the transfer;
(9) Prior to or upon closing of the transfer, Franchisee shall pay in full all creditors and suppliers of the Franchised Business or the Publication; and
Prior to the closing of a transfer of the Franchised Business or expiration of this Agreement, Franchisee shall comply with Franchisor's instructions regarding the wind-down of Franchisee's operations, comply with the wind-down procedures in the Franchise Brand Standards Manual, and cooperate in good faith with Franchisor, its affiliates, and their representatives during the wind-down period, including meeting digitally or in-person if requested. For the avoidance of doubt, Franchisee has an obligation to continue to operate the Franchised Business until the closing of the transfer or the expiration date. If Franchisee abandons the Franchised Business prior to the closing of the transfer or the expiration date or fails to comply with the wind-down procedures in the Franchise Brand Standards Manual, Franchisee shall be in default under this Agreement and Franchisor may charge the Wind-Down Damages. Franchisee shall pay all costs, expenses and attorneys' fees incurred by Franchisor in enforcing the terms and conditions of this provision.
Therefore, Franchisee and Franchisor agree that a reasonable estimate of those damages (as liquidated damages and not as a penalty) is an amount equal to the greater of six months' worth of the average Royalty Franchisee paid for the prior 12 months or $2,500 ("Wind-Down Damages").
Upon execution of this Transfer Agreement by Franchisor, Transferor must have paid Franchisor all sums owed to Franchisor by Transferor, including but not limited to the required transfer fee and all Returnable Commissions.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, prior to or upon closing a franchise transfer, the franchisee must pay in full all creditors and suppliers of the Franchised Business or the Publication. Additionally, the transferor must have paid Belocal all sums owed, including the required transfer fee and all Returnable Commissions.
Specifically, when applying for consent to transfer, the franchisee must pay Belocal a transfer fee equal to the then-current initial franchise fee that Belocal generally charges new franchisees, along with Belocal's reasonable attorney's fees incurred in connection with the transfer. The transferor remains liable for all obligations to Belocal incurred prior to the transfer's effective date and must execute any instruments Belocal requests to evidence this liability.
Furthermore, if the franchisee abandons the Franchised Business prior to the closing of the transfer or fails to comply with the wind-down procedures in the Franchise Brand Standards Manual, the franchisee shall be in default under this Agreement and Belocal may charge Wind-Down Damages, which is the greater of six months' worth of the average Royalty Franchisee paid for the prior 12 months or $2,500. Belocal can deduct or withhold any Wind-Down Damages from Franchisee's Commissions or transfer the Wind-Down Damages by EFT from Franchisee to Franchisor.
These financial obligations ensure that Belocal is compensated for the transfer and that all outstanding debts related to the franchise are settled before the new franchisee assumes control. Prospective franchisees should carefully consider these costs when planning a transfer, as they can significantly impact the overall financial feasibility of the transaction.