What is the time period prior to termination that defines competitive services for Belocal franchisees?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
(B) The term "Competitive Business" includes the following divisible and severable business lines or services (each, a "Competitive Service") which the Franchisee's Franchised Business of which Covenantor is a part provided (i) for covenants applicable during the term of the Covenantor's business relationship with Franchisee or the Franchised Business, at any time during that relationship and (ii) for covenants applicable after the term of the Covenantor's relationship with Franchisee or the Franchised Business, at any time within the twelve-month period prior to the termination of the Covenantor's business relationship with the Franchised Business or the termination, expiration, or transfer of the Franchisee's Franchise Agreement:
(i) selling digital and/or print advertising to businesses for publication in or related to digital or print publications that compete with any N2 publication(s), including BELOCAL publications;
(ii) publishing and/or facilitating the publishing of digital or print publications that compete with any N2 publication(s), including BELOCAL publications;
(iii) developing relationships among members of Communities within the Territory, or members of Industry Groups within the Territory and within ten miles of the Territory, for the purpose of selling or marketing digital or print publications that compete with any N2 publication(s), including BELOCAL publications;
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the definition of 'Competitive Services' that triggers post-term covenants is based on activities conducted within a specific timeframe. For covenants applicable after the termination of the franchisee's relationship with Belocal, the relevant period is any time within the twelve-month period prior to the termination, expiration, or transfer of the Franchise Agreement. This means that any business lines or services the franchisee's business provided during that year before termination can be considered 'Competitive Services'.
Specifically, 'Competitive Services' include selling digital or print advertising that competes with Belocal publications, publishing competing digital or print publications, and developing relationships to market competing publications. It also encompasses organizing events for advertisers or community members to market competing publications and offering digital marketing and advertising services similar to those offered by Belocal. These restrictions apply to activities within the franchisee's territory and, in some cases, within a ten-mile radius of the territory.
This twelve-month look-back period is crucial because it defines the scope of activities a former Belocal franchisee is restricted from engaging in after leaving the franchise system. If a franchisee was involved in any of the listed 'Competitive Services' during that year, they will be subject to the post-term non-competition covenants. This could significantly limit their business opportunities in the same or similar industries after their franchise agreement ends.
Prospective franchisees should carefully consider this clause, as it could impact their future business ventures. It is important to understand exactly what activities are included in 'Competitive Services' and how the twelve-month period is calculated to avoid unintentional breaches of the non-competition agreement. Franchisees should seek legal counsel to fully understand the implications of these restrictions and how they might affect their ability to operate a similar business after their Belocal franchise terminates.