What is the relationship between the Principal's Undertaking and the Belocal Franchisor entering into the Agreement with the Franchisee?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
. Each Principal acknowledges and agrees as follows:
- (a) The undersigned is a "Principal," as defined in the Agreement, and has read the terms and conditions of the Agreement and acknowledges that the execution of this Principal's Undertaking is in partial consideration for, and a condition to, Franchisor entering into the Agreement with Franchisee and that Franchisor would not have entered into the Agreement without the execution of this Principal's Undertaking; and
- (b) Without limiting any of Franchisee's obligations under the Agreement, Principal (i) makes all of the covenants, representations, warranties, and agreements set forth in Section 5.L. (Legal Compliance), Section 7. (Confidentiality, Covenants Against Unfair Competition and Solicitation), Section 8. (Use of Marks and Copyrighted Materials), Section 9. (Transfer and Assignment), and Section 14. (Applicable Law; Dispute Resolution) of the Agreement and is obligated to perform thereunder; and (ii) represents that each and every representation of Franchisee made in connection with the Agreement is true, correct, and complete in all respects as of the time given and as of the time of the undersigned's execution of this Principals' Undertaking.
- (c) If Principal is an Owner, Principal (i) makes all of the covenants, representations, and warranties set forth in Sections 7.B and 7.D of the Agreement and (ii) represents that each and every representation of Franchisee made in connection with the Agreement is true, correct, and complete in all respects as of the time given and as of the time of the undersigned's execution of this Principals' Undertaking. If Principal is not an Owner, Principal shall not be bound by Sections 7.B and 7.D of the Agreement.
- (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.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the execution of the Principal's Undertaking is a key condition for Belocal to enter into a Franchise Agreement with a franchisee. The Principal's Undertaking serves as partial consideration for Belocal's agreement, meaning Belocal would not proceed with the Franchise Agreement without it.
The Principal, as defined in the Franchise Agreement, acknowledges having read the agreement's terms and conditions. By signing the Principal's Undertaking, the Principal agrees to be bound by specific sections of the Franchise Agreement, including those pertaining to legal compliance, confidentiality, non-competition, use of Belocal's trademarks, transfer and assignment restrictions, and dispute resolution. This ensures that the Principal is directly responsible for upholding these key obligations.
Furthermore, the Principal acts as a guarantor for the franchisee's financial obligations. They agree to be jointly, individually, and severally liable for all amounts the franchisee owes under the Franchise Agreement, including any indemnity obligations. This means Belocal can seek payment directly from the Principal if the franchisee fails to pay. The Principal's liability is direct and independent of the franchisee's, and Belocal can pursue action against the Principal without first pursuing action against the franchisee.
This arrangement provides Belocal with added security and recourse, ensuring that the obligations under the Franchise Agreement are met. It also aligns the Principal's interests with those of Belocal, as the Principal is directly responsible for certain aspects of the franchise's operation and financial performance.