Does Belocal specify the wind-down procedures that must be followed to avoid Wind-Down 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, the document mentions "wind-down procedures" in the context of potential damages but does not detail what these procedures are. Specifically, if a franchisee fails to comply with the wind-down procedures or abandons the franchised business, they may be subject to Wind-Down Damages.
The Wind-Down Damages are an amount equal to the greater of (a) 6 months’ worth of the average Royalty the franchisee paid for the 12 months prior to the default or (b) $2,500. This fee is due on demand.
Because the FDD does not specify what these wind-down procedures are, it is important that a prospective franchisee ask Belocal for a detailed explanation of these procedures. Understanding these procedures is crucial to avoid incurring Wind-Down Damages, which could be a significant financial burden depending on the royalty payments made prior to any default or abandonment of the franchise.