After termination of a business relationship with a Belocal franchisee, for how long is a covenantor restricted from soliciting business advertisers?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
In order to protect the Confidential Information, the Marks, the goodwill of the System, and the legitimate business interests of the Franchised Business, Covenantor agrees that, for a period of two years following the earlier of (i) the termination of Covenantor's business relationship with Franchisee (regardless of the reason for such termination), or (ii) the termination, expiration, or transfer of Franchisee's interest in the Franchise Agreement (regardless of the reason for termination, expiration, or transfer), Covenantor will not, without Franchisor's prior written consent or as permitted under valid franchise agreements with Franchisor, solicit or attempt to solicit, using any form of oral, written, or electronic communications, Franchisor's, Franchisor's affiliate, or Franchisee's current or prospective business advertisers with whom Covenantor interacted during the twelve-month period prior to the termination of Covenantor's business relationship or the termination, expiration, or transfer of Franchisee's interest in the Franchise Agreement, for the purpose of soliciting, offering, or accepting Competitive Services.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a covenantor faces restrictions on soliciting business advertisers for a period of two years following the termination of their business relationship with the franchisee. This restriction applies regardless of the reason for the termination. Specifically, the covenantor cannot solicit or attempt to solicit, through any form of communication, current or prospective business advertisers of Belocal, its affiliates, or the franchisee. This restriction applies to advertisers with whom the covenantor interacted during the twelve-month period before the termination.
The non-solicitation clause aims to protect Belocal's confidential information, trademarks, the goodwill of the system, and the legitimate business interests of the franchised business. The restriction is in place to prevent a former covenantor from leveraging their knowledge and relationships gained during their time with Belocal to unfairly compete against the brand. This includes soliciting, offering, or accepting goods or services that are competitive with those offered by Belocal, the franchisee, or their affiliates.
This provision is fairly standard in franchising to protect the brand and existing franchisees from unfair competition by those who have inside knowledge of the business. Prospective Belocal franchisees should carefully consider the implications of this clause, especially if they plan to remain in the same industry after leaving the Belocal system. It is important to understand the scope of the restriction, including the types of advertisers covered and the geographic area to which it applies. Franchisees should seek legal counsel to fully understand their obligations under this covenant.