Does Belocal have a step-in right upon the death or disability of a franchisee or principal?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary |
|---|---|---|
| l. Franchisor's approval of transfer by franchisee | Section 9.B. | You must notify us with a notice of transfer, and we must give written consent to a transfer by you or your Principals. All transfers must meet certain conditions. |
| m. Conditions for franchisor approval of transfer | Section 9.B. | Conditions include the following: you must pay all amounts due; not be in default; sign a general release (subject to state law); pay a transfer fee; and remain liable for pre-transfer obligations. Any Transferee must meet our criteria, complete required training, meet our guaranty obligations, make certain representations, and enter into our then-current franchise agreement. |
| n. Franchisor's right of first refusal to acquire franchisee's business | Section 9.C. and 9.D. | We can match any purchase offer you want to accept for your Franchised Business. Before you obtain an offer from a buyer, you must first offer to us the right to purchase your Franchised Business. If you do so, then we only have a right of first refusal if the terms proposed to another buyer are different than the terms offered to us. |
| o. Franchisor's option to purchase franchisee's business | Section 9.C. and 9.D. | We can match any purchase offer you want to accept for your Franchised Business. Before you obtain an offer from a buyer, you must first offer to us the right to purchase your Franchised Business. If you do so, then we only have a right of first refusal if the terms proposed to another buyer are different than the terms offered to us. |
| p. Death or disability of franchisee | Section 9.E. | If the Franchisee or a Principal dies or is disabled, the interest of such Franchisee or Principal must be transferred within six months. Franchisor has a step-in right upon death or disability. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION THE FRANCHISE RELATIONSHIP (FDD pages 49–55)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, Belocal does have a step-in right in the event of the death or disability of a franchisee or a principal. Specifically, if a franchisee or a principal dies or becomes disabled, the interest of that individual must be transferred within six months.
This provision in the franchise agreement allows Belocal to ensure the continued operation and management of the franchise in unforeseen circumstances. The step-in right gives Belocal the option to take over the business temporarily to stabilize it and ensure it continues to meet brand standards while the transfer of ownership is being sorted out.
For a prospective franchisee, this means that in the event of death or disability, their business interest must be transferred within six months. Belocal's step-in right provides a safety net, allowing them to maintain control and standards during the transition period. Franchisees should carefully consider this provision and discuss with Belocal the specific procedures and conditions under which they might exercise this right.