Does Belocal specify what constitutes an acceptable transfer price for calculating Transfer Damages?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Management Fee | 45% of monthly Cash Received, plus any expenses we incur in managing the Franchised Business | Monthly | Only payable in the event we must operate your franchise due to death, disability, defaults etc. The Management Fee is in addition to other fees due to us. |
| Customer Complaint Fee | Our costs and expenses associated with our response to and any resolution of a complaint | On demand | If an advertiser, client, or third party complains to us and you fail to satisfactorily remedy the complaint, you will pay us our costs and expenses associated with our response to and any resolution of the complaint. |
| Wind-Down Damages | An amount equal to the greater of (a) 6 months' worth of the average Royalty you paid for the 12 months prior to the default or (b) $2,500 | On demand | Only payable if you fail to comply with the wind-down procedures or abandon the Franchised Business. |
| Transfer Damages | Greater of 15% of transfer price or $25,000 | Within 15 days of our demand | You will pay these transfer damages if you do not comply with the transfer terms under the Franchise Agreement. |
Source: Item 6 — OTHER FEES (FDD pages 14–31)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, if a franchisee fails to comply with the transfer terms outlined in the Franchise Agreement, they will be required to pay Transfer Damages. The amount of these damages is determined as the greater of 15% of the transfer price or $25,000. The payment is due within 15 days of Belocal's demand.
However, the FDD does not define or specify what constitutes the 'transfer price'. This lack of clarity could create uncertainty for a franchisee looking to sell their Belocal franchise. Without a clear definition, there could be disputes over how the transfer price is determined, potentially leading to higher transfer damage fees.
Prospective Belocal franchisees should seek clarification from Belocal regarding the specific criteria and methods used to determine the 'transfer price' in the context of calculating Transfer Damages. Understanding this definition is crucial for financial planning and decision-making related to the potential sale of the franchise in the future. It is important to have a clear understanding of all potential costs associated with transferring ownership.