What is the significance of 'Principals' in the Belocal Franchise Agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
We may require your current and future Principals (as defined in the Franchise Agreement), which includes the franchisee "Owners," to sign a Principals' Undertaking Agreement, binding themselves individually to certain provisions of the Franchise Agreement, including the covenants against competition (Owners only), solicitation, and disclosure of confidential information; restrictions on transfer; and dispute resolution procedures. The Principals will also guaranty any amounts owed by Franchisee to us.
Source: Item 1 — THE FRANCHISOR AND ANY PARENTS, PREDECESSORS, AND AFFILIATES (FDD pages 8–12)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the term 'Principals' refers to the owners, officers, directors, and limited liability company managers of a franchisee entity (corporation, partnership, or LLC). Belocal may require these Principals to sign a Principals' Undertaking Agreement, which binds them individually to certain provisions of the Franchise Agreement. This is a common practice in franchising to ensure that the individuals in control of a franchisee entity are personally responsible for upholding key aspects of the agreement.
The Principals' Undertaking Agreement specifically covers covenants against competition, solicitation, and disclosure of confidential information. It also includes restrictions on transfer and dispute resolution procedures. This means that even if a Principal leaves the franchisee entity, they are still bound by these obligations. For example, they cannot start a competing business or solicit Belocal's clients or franchisees, and they must adhere to the agreed-upon methods for resolving disputes.
Furthermore, the Principals will guarantee any amounts owed by the franchisee to Belocal. This is a significant point, as it means the Principals are personally liable for the financial obligations of the franchise. If the franchisee entity fails to pay royalties, fees, or other amounts due to Belocal, Belocal can pursue the Principals directly to recover those amounts. This personal guarantee adds an extra layer of security for Belocal and underscores the importance of the Principals' commitment to the success and financial stability of the Belocal franchise.