What rights does the Belocal franchisor retain in addition to the right to terminate the agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
. In addition to Franchisor's right to terminate this Agreement, and not in lieu of such right, or any other rights Franchisor may have against Franchisee, upon a failure by Franchisee or any Principal to comply with any of the requirements of this Agreement, or upon a failure to cure any default within the applicable time period (if any), Franchisor shall have the right, but not the obligation, to assume management of the Franchised Business (or appoint a party to assume its management) until such time as Franchisor determines that the default has been cured and Franchisee is otherwise in compliance with this Agreement, or until Franchisor determines it will no longer exercise its step-in right. The terms and conditions for the exercise of Franchisor's step-in right are set forth in Section 12.E.
- H. Limitation of Services or Benefits. Franchisor shall have the right, but not the obligation, to temporarily or permanently limit or remove certain services or benefits provided by Franchisor or Franchisor's affiliates, or required to be provided by Franchisor, to Franchisee hereunder in lieu of exercising its right to terminate this Agreement, including, without limitation, eliminating any Online Presences associated with the Publication or the Franchised Business, restricting or removing Franchisee's right to purchase products directly or indirectly from Franchisor or its affiliates, limiting Franchisor's advertising and promotional assistance, restricting or removing Franchisee's right to use Franchisor's Software Programs or Franchisor-provided Technology, if any, and publishing the Publication. Nothing in this Section constitutes a waiver of any other right or remedy of Franchisor under this Agreement or at law. Franchisee acknowledges that Franchisor's exercise of its rights pursuant to this Section 10.H. shall not be deemed a constructive termination. Any services or benefits removed or limited pursuant to this Section 10.H. may be reinstated at any time in Franchisor's sole discretion.
- I. Notification. Franchisee hereby authorizes Franchisor to notify any lender, creditor, customer, supplier, or landlord of Franchisee or the Franchised Business upon the occurrence of any default under this Section 10, or any event or circumstance which the giving of notice or the passage of time, or both, would constitute an event of default under this Section 10, and to otherwise communicate with such lenders, creditors, customers, suppliers, and/or landlords with respect to any such default, or any such event or circumstance.
- J. Wind-Down Damages. Franchisee and Franchisor agree that it would be difficult if not impossible to determine the amount of damages that Franchisor would suffer due to Franchisee (i) abandoning the Franchised Business prior to the expiration date or a mutually agreed upon termination date or (ii) failing to comply with the wind-down procedures in the Franchise Brand Standards Manual. Therefore, Franchisee and Franchisor agree that a reasonable estimate of those damages (as liquidated damages and not as a penalty) is an amount equal to the greater of six months' worth of the average Royalty Franchisee paid for the prior 12 months or $2,500 ("Wind-Down Damages"). Franchisor shall have the right to deduct or withhold any Wind-Down Damages from Franchisee's Commissions or transfer the Wind-Down Damages by EFT from Franchisee to Franchisor.
11. OBLIGATIONS OF FRANCHISEE PRIOR TO OR UPON EXPIRATION OR TERMINATION
- A. Prior to the closing of a transfer of the Franchised Business or expiration of this Agreement, Franchisee shall comply with Franchisor's instructions regarding the wind-down of Franchisee's operations, comply with the wind-down procedures in the Franchise Brand Standards Manual, and cooperate in good faith with Franchisor, its affiliates, and their representatives during the wind-down period, including meeting digitally or in-person if requested. For the avoidance of doubt, Franchisee has an obligation to continue to operate the Franchised Business until the closing of the transfer or the expiration date.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, in addition to the right to terminate the franchise agreement, Belocal retains several other rights. One significant right is the ability to assume management of the franchised business if the franchisee fails to comply with the agreement or doesn't correct a default within the given timeframe. Belocal can manage the business itself or appoint another party to do so until the default is resolved and the franchisee is in compliance, or until Belocal decides to discontinue this step-in right.
Belocal also has the right to limit or remove certain services or benefits instead of terminating the agreement. This includes actions like eliminating online presences, restricting the franchisee's ability to purchase products from Belocal, limiting advertising and promotional assistance, and restricting the use of Belocal's software or technology. Belocal's exercise of these rights does not constitute a constructive termination, and any removed or limited services can be reinstated at Belocal's discretion.
Furthermore, Belocal is authorized to notify any of the franchisee's lenders, creditors, customers, suppliers, or landlords upon the occurrence of a default or any event that could lead to a default. Belocal can also communicate with these parties regarding the default or potential default. In the event of a crisis that could negatively impact Belocal's brand, Belocal has the right to establish emergency procedures, potentially requiring the franchisee to temporarily cease publishing, and can take control of communications management if the publicity surrounding the event could harm Belocal's reputation or goodwill.