After the termination of the Belocal agreement, for how long is the franchisee restricted from owning, operating, or managing a Competitive Business?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
- D.
Post-term Noncompetition.
For a period of two years after the termination, expiration, or transfer of this Agreement, regardless of the reason for such termination, expiration, or transfer, Franchisee and its Owner(s) shall not, within the Restricted Territory (as defined in Section 7.G. below):
(1) own, operate, or manage any Competitive Business, or
(2) engage in, provide, or assist others in engaging in or providing any Competitive Services; or
(3) perform any activities for or relating to a Competitive Business, the performance of which would reasonably be likely to involve the use or disclosure of Confidential Information, and which activity is similar to the activities Franchisee or the Owner(s) engaged in during the twelve-month period prior to the termination, expiration, or transfer of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a franchisee faces certain restrictions after the termination, expiration, or transfer of their Franchise Agreement. Specifically, for a period of two years, the franchisee and their owners are restricted from owning, operating, or managing any Competitive Business within a defined Restricted Territory. This restriction applies regardless of the reason for the termination, expiration, or transfer of the agreement.
The Restricted Territory is defined with several layers of specificity. It initially includes the territories of, and a ten-mile radius around, any publication business owned by Belocal, its affiliates, or its franchisees, including the franchisee's own territory. However, the definition acknowledges that this initial scope might be deemed too broad. Therefore, it includes alternative, narrower definitions to be applied if a court or arbitrator finds the initial definition unreasonable. These alternatives progressively reduce the restricted area, potentially limiting it to just the territories of Belocal's publication businesses, then the territories of Belocal's franchisees, and finally, as a last resort, a ten-mile radius around the franchisee's territory or just the territory itself.
A "Competitive Business" is also specifically defined, encompassing various business lines or services that the Belocal franchise provided. This includes selling digital or print advertising for publications competing with Belocal, publishing competing publications, developing relationships to market competing publications, organizing events for advertisers to market competing publications, and offering digital marketing and advertising services similar to those offered by Belocal. These restrictions are designed to protect Belocal's confidential information, trademarks, goodwill, and legitimate business interests, and franchisees agree that the limitations on time, geographical area, and scope of activity are reasonable and necessary for this protection.