Regarding the Belocal franchise agreement, what covenants, representations, warranties, and agreements survive the execution and delivery of the agreement, and until when?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
-
- 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.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the franchise agreement includes provisions for the survival of certain covenants and obligations even after the termination of the agreement. Specifically, upon the execution of a Transfer Agreement by Belocal, the Franchise Agreement will terminate automatically. However, the transferor (the original franchisee) and their principals remain bound by provisions that, by their nature, extend beyond the termination date. These include obligations related to confidentiality, non-solicitation, and non-competition, ensuring that sensitive information isn't disclosed and that unfair competitive practices are avoided.
In addition to these protective covenants, the transferor and their principals are still responsible for the payment of any outstanding debts and taxes, as well as indemnification obligations, which may arise from their operation of the Belocal franchise. They must also adhere to the post-term obligations outlined in Section 11 of the Franchise Agreement, which likely details specific actions required after the franchise relationship ends. Furthermore, the dispute resolution provisions set forth in Section 14 of the Franchise Agreement remain in effect, meaning that any disagreements related to the franchise agreement will continue to be resolved according to the procedures outlined in that section.
For a prospective Belocal franchisee, this means that certain obligations and responsibilities continue even after the franchise agreement is terminated or transferred. It is important to understand the full scope of these surviving obligations, as they can have significant legal and financial implications. Franchisees should carefully review Sections 11 and 14 of the Franchise Agreement to fully understand their post-termination responsibilities and the process for resolving any disputes that may arise.