What are the two ways the Belocal Wind-Down Damages fee is calculated, and which one is used?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Management Fee | 45% of monthly Cash Received, plus any expenses we incur in managing the Franchised Business | Monthly | Only payable in the event we must operate your franchise due to death, disability, defaults etc. The Management Fee is in addition to other fees due to us. |
| Customer Complaint Fee | Our costs and expenses associated with our response to and any resolution of a complaint | On demand | If an advertiser, client, or third party complains to us and you fail to satisfactorily remedy the complaint, you will pay us our costs and expenses associated with our response to and any resolution of the complaint. |
| Wind-Down Damages | An amount equal to the greater of (a) 6 months' worth of the average Royalty you paid for the 12 months prior to the default or (b) $2,500 | On demand | Only payable if you fail to comply with the wind-down procedures or abandon the Franchised Business. |
| Transfer Damages | Greater of 15% of transfer price or $25,000 | Within 15 days of our demand | You will pay these transfer damages if you do not comply with the transfer terms under the Franchise Agreement. |
Source: Item 6 — OTHER FEES (FDD pages 14–31)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the Wind-Down Damages fee is calculated in one of two ways, with the franchisee being responsible for the greater amount. The first calculation is based on six months' worth of the average Royalty fees paid by the franchisee over the 12 months leading up to the default. The second calculation is a flat fee of $2,500.
This means that if a franchisee's average monthly royalty payments were high, six months' worth of those payments could easily exceed the $2,500 threshold, making that the amount due. Conversely, if the average royalty payments were low, the franchisee would still be responsible for paying the $2,500 minimum.
This fee is only payable if the franchisee fails to comply with the wind-down procedures outlined in the Franchise Agreement or if they abandon the Belocal franchised business. It is important for prospective franchisees to understand these conditions and the potential financial implications of non-compliance or abandonment.