Is a transfer by bankruptcy considered a transfer of the Belocal franchise agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
For purposes of this Agreement, the term "transfer" shall mean any issuance, sale, assignment, gift, pledge, mortgage or any other encumbrance, transfer by bankruptcy, transfer by judicial order, merger, consolidation share exchange, or transfer by operation of law or otherwise, whether direct or indirect, voluntary or involuntary.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a transfer by bankruptcy is considered a transfer of the franchise agreement. Belocal requires franchisee to get prior written consent from the franchisor before transferring or assigning the agreement.
Belocal defines "transfer" broadly, including not only voluntary actions but also involuntary ones like those resulting from bankruptcy or judicial orders. This means that if a franchisee's business is subject to bankruptcy proceedings, it is automatically classified as a transfer under the franchise agreement. Consequently, the franchisee must adhere to the transfer conditions outlined in the agreement.
The franchise agreement stipulates that any transfer that does not comply with the agreement's provisions is considered a material breach and is void. Therefore, a Belocal franchisee experiencing financial difficulties needs to be aware that any transfer of the franchise due to bankruptcy must be handled carefully and in accordance with the franchise agreement to avoid breaching the contract. This may involve seeking approval from Belocal and fulfilling any other requirements for transfer, such as paying fees or providing necessary documentation.