Who is responsible for covering liabilities, damages, costs, and expenses, including attorney's fees, if a Belocal franchisee defaults?

N

• A. Default and Termination. Franchisee acknowledges that each of Franchisee's obligations described in this Agreement is a material and essential obligation; that nonperformance of such obligations will adversely and substantially affect Franchisor and the System; and that the exercise by Franchisor of the rights and remedies set forth herein is appropriate and reasonable. Franchisee agrees to pay to Franchisor all liabilities, damages, costs, and expenses, including reasonable attorney's fees, incurred by Franchisor in connection with any default by Franchisee under this Agreement.
• B. Automatic Termination. Franchisee shall be deemed to be in default under this Agreement, and all rights granted herein shall automatically terminate without notice to Franchisee if:
• (1) Franchisee becomes insolvent or makes a general assignment for the benefit of creditors;
• (2) Franchisee files a voluntary petition under any section or chapter of federal bankruptcy law or under any similar law or statute of the United States or any state thereof;
• (3) an involuntary petition is filed with respect to Franchisee under any such laws and is not dismissed within 60 days after it is filed;
  • (4) Franchisee admits in writing its inability to pay its debts when due;
• (5) Franchisee is adjudicated as bankrupt or insolvent in proceedings filed against Franchisee under any section or chapter of federal bankruptcy laws or under any similar law or statute of the United States or any state;
• (6) a bill in equity or other proceeding for the appointment of a receiver of Franchisee or other custodian for Franchisee's business or assets is filed and consented to by Franchisee;
• (7) a receiver or other custodian (permanent or temporary) of Franchisee's assets or property, or any part thereof, is appointed by any court of competent jurisdiction;

• (8) proceedings for a composition with creditors under any state or federal law should be instituted by or against Franchisee;
• (9) a final judgment remains unsatisfied or of record for 30 days or longer (unless supersedeas bond is filed);
  • (10) Franchisee is dissolved;
• (11) This Agreement and the Franchised Business are not transferred in accordance with Section 9 of this Agreement within six months of the death or disability of Franchisee or any of its Principals, unless Franchisor grants an extension in writing; or
  • (12) execution is levied against Franchisee's business or property.
• C. Termination on Notice; No Cure. Franchisor may terminate this Agreement immediately upon written notice to Franchisee, without an opportunity to cure, if:
• (1) Franchisee abandons or otherwise ceases operations of the Franchised Business contemplated by this Agreement;
• (2) Franchisee or any Principal transfers or attempts to transfer any interest in this Agreement, Franchisee, or the Franchised Business in violation of Section 9. of this Agreement;
• (3) Franchisee or any Principal uses the Copyrighted Materials or uses or discloses the Confidential Information in violation of this Agreement;
• (4) Franchisee or any Principal fails to comply with any of the covenants set forth in this Agreement, including those in Section 7.A to 7.D. relating to confidentiality and restrictions against unfair competition and solicitation;
• (5) Franchisee or any Principal misuses or makes any unauthorized use of the System or the Marks, or impairs the goodwill associated therewith or Franchisor's rights therein; or otherwise breaches the obligations set forth in Section 8;
• (6) Franchisee or any Principal makes any material misrepresentation to Franchisor or breaches any warranty or representation made to Franchisor, whether in this Agreement or otherwise;
• (7) Whether before or after the Effective Date, Franchisee or any Principal has been or is charged with, convicted of, or pleads nolo contendere to, a felony or indictable offense in any court, is subject to a judgment, default, lien, bankruptcy, or similar occurrence, becomes known to Communities, Industry Groups, or advertisers as being of bad moral character, disparages, embarrasses, or tarnishes Franchisor's reputation, or fails to comport itself at all times in accordance with the highest standards of conduct and behavior, consistent with its responsibilities as a franchisee;
• (8) For any N2 publication for which Franchisee is responsible, the total expenses, including Royalty and Publication Expenses (defined below), in a given month exceed the revenue actually received by Franchisor in that same month under the Advertising Contracts for that same publication;

Source: Item 22 — CONTRACTS (FDD page 71)