Does termination of the Intercompany License affect existing Belocal Franchise Agreements?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Our rights to the Marks and the proprietary System know-how are derived from a non-exclusive, perpetual license ("Intercompany License") between us and The N2 Company. The Intercompany License grants us the right to use the Marks and the proprietary information related to the System, such as the know-how and the Franchise Brand Standards Manual, for the purpose of licensing them to our franchisees and fulfilling our obligations under the Franchise Agreement. The Intercompany License is perpetual and terminable only for material breach of the Intercompany License agreement and only if we do not cure or begin to cure such breach within 90 days after notice. We and The N2 Company may also mutually agree to modify the terms of the Intercompany License. Termination of the Intercompany License will not change the effectiveness of any Franchise Agreement as long as you are not in default under such Franchise Agreement.
Source: Item 13 — TRADEMARKS (FDD pages 44–46)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the termination of the Intercompany License between Belocal and The N2 Company will not impact the effectiveness of existing Franchise Agreements, provided the franchisee is not in default. This Intercompany License grants Belocal the right to use trademarks and proprietary information, such as know-how and the Franchise Brand Standards Manual, for licensing to franchisees and fulfilling obligations under the Franchise Agreement. The license is perpetual and can only be terminated for a material breach that is not cured within 90 days after notice, or by mutual agreement between Belocal and The N2 Company.
This provision offers a degree of security for Belocal franchisees. Even if the licensing agreement between Belocal and its affiliate, The N2 Company, is terminated, the franchisee's agreement remains valid as long as they are compliant with its terms. This protects the franchisee's investment and business operations from being disrupted due to issues between Belocal and its affiliate.
However, it is important for prospective franchisees to understand the terms of the Franchise Agreement that define what constitutes a default. Franchisees should also monitor the relationship between Belocal and The N2 Company, as any significant disputes could indirectly affect the franchise system. While the agreement aims to protect franchisees, unforeseen consequences could arise from a termination of the Intercompany License, especially concerning the use of trademarks and proprietary information in the long term.