Regarding the Belocal franchise agreement, what happens to the covenants, representations, warranties, and agreements of the parties after execution and delivery?

According to Belocal's 2025 Franchise Disclosure Document, the covenants, representations, and warranties made by the franchisee and their principals are considered continuing obligations. This means that these commitments remain in effect even after the franchise agreement is signed and the franchise is operating. Belocal franchisees must cooperate with Belocal to verify ongoing compliance with these obligations. Failure to comply with these covenants, representations, and warranties constitutes a material breach of the franchise agreement, which could lead to termination of the agreement.

Specifically, principals of the Belocal franchisee also undertake certain obligations. As a condition of Belocal entering into the agreement with the franchisee, the principal makes all the covenants, representations, warranties, and agreements set forth in specific sections of the agreement. These sections relate to legal compliance, confidentiality, covenants against unfair competition and solicitation, use of marks and copyrighted materials, transfer and assignment, and applicable law and dispute resolution. The principal also represents that every representation made by the franchisee is true, correct, and complete, both at the time it was given and at the time the principal signs the Principal's Undertaking.

For Belocal franchisees, this means that not only are they bound by the terms of the franchise agreement, but their principals are also individually bound by certain key provisions. This ensures that Belocal has recourse against both the franchisee entity and its principals if there are breaches of contract. Prospective franchisees should carefully review all sections referenced in the Principal's Undertaking to fully understand the scope of these continuing obligations and the potential consequences of non-compliance.