Does Belocal have the right to deduct fees from a Belocal franchisee's commissions?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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"Commission" the Franchisee will receive for each of the N2 publications it manages, including the Publication, is calculated as follows:
- (i) For any print advertisement Franchisee sells for inclusion in the Publication, the amount equal to the total Cash Received for the Publication in the applicable month; minus the Royalty for the Publication for the applicable month; minus the Publication Expense for the Publication for the applicable month; plus
- (ii) For any print advertisement Franchisee sells for inclusion in a publication managed by another franchisee or the Franchisor's affiliate, as applicable, (x) the amount equal to Franchisor's then-current Outgoing Cross-Selling Fee, divided by the total number of publications Franchisee manages, or (y) the Pre-print Commission, divided by the total number of publications Franchisee manages; plus
- (iii) For any print advertisement another franchisee or Franchisor's affiliate sells for inclusion in the Publication, the amount equal to Franchisor's then-current Receiving Cross-Selling Fee; plus
- (iv) The amounts paid by advertisers for the digital extended reach ("Extended Reach") services allocated to the Publication; minus the Extended Reach fee for the applicable month; plus
- (v) If in the future Franchisor institutes a fee for managing a client, for any print advertisement where Franchisee "manages" (as defined in Franchisor's then-current Franchise Brand Standards Manual) a client who publishes a print advertisement in a publication managed by another franchisee, Franchisee will receive a Commission equal to Franchisor's then-current Managing Cross-Selling Fee, divided by the number of publications Franchisee manages; minus
- (vi) All other applicable fees and/or deductions applicable to Franchisee or the Publication, including, but not limited to: (1) extra copy orders fee; (2) late commission deductions;
(3) design revision fee and adjustment fee; (4) missed deadline fee and late revision fee; (5) Returnable Commissions; (6) fees for services Franchisor or its affiliates provide, including any optional services Franchisee elects to receive from Franchisor or its affiliates; (7) cross-selling fees originating from Franchisee's sales into publications managed by Franchisor or its affiliates or fees for Corporate Ads; (8) lead generation fees; (9) administrative credit card fees; and/or (10) Negative Commissions.
"Confidential Information" means information and know-how, oral, visual or written, and documents relating to Franchisor, its affiliate, the Franchised Business, and any publication furnished by Franchisor or its affiliates, or representatives of Franchisor, to Franchisee. Franchisor's Confidential Information includes, without limitation, all trademarks, trade names, service marks, emblems, and indicia of origin used by Franchisor in connection with the operation of the Franchised Business, and all trade secrets or know-how, including, but not limited to, research, plans, products, services, customer lists, supplier information, advertisers, business plans, marketing data and materials, software, electronic code, forms, processes, methods of operation, strategic information, financial information, manuals, and other business information disclosed to Franchisee by Franchisor or its representatives, as well as any data stored on or within the IT Systems.
"Copyrighted Materials" means works of authorship which are owned by Franchisor or its affiliate and fixed in a tangible medium of expression including, without limitation, the contents of the Franchise Brand Standards Manual; the design elements of the Marks; Franchisor's bulletins, correspondence, and communications with its franchisees; training, advertising, and promotional materials; and the content and design of Franchisor's Online Presences and all N2 publications; and other written materials relating to the operation of the Franchised Business and the System.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, Belocal has the right to deduct various fees and expenses from a franchisee's commissions. The commission the franchisee receives for each of the N2 publications it manages is calculated by subtracting royalties, publication expenses, and other applicable fees and/or deductions from the total cash received for print advertisements. These deductions include, but are not limited to, extra copy order fees and late commission deductions.
Additionally, the document states that the fees for services performed will be deducted from the commissions owed to the franchisee by N2's affiliate, N2 Franchising, Inc. Belocal also has the right to deduct or withhold any wind-down damages from the franchisee's commissions. Wind-down damages are defined as the greater of six months' worth of the average royalty the franchisee paid for the prior 12 months or $2,500.
Furthermore, if the calculation of the commission results in a negative commission (where royalties, publication expenses, and other fees exceed cash received), the franchisee will not receive a commission for that month, and the negative amount will be carried over and deducted from cash received in subsequent months. If a franchisee has been overpaid, they must return the overpayment to Belocal. Belocal may also charge a credit card fee for payments made via credit card, which may include transaction fees and administrative costs, and can adjust this fee with 30 days' notice.