Who has ultimate discretion regarding whether to enter into any Advertising Contract for a Belocal franchise?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
In promoting the Publication, Franchisee, its Principal(s), operations manager, and other representatives, must:
(1) Solicit contracts for print advertising in the Publication from advertisers and digital advertising services ("Advertising Contracts"), quoting prices and terms set by Franchisor or its affiliate (or otherwise approved by Franchisor in writing), and using the form contracts provided by Franchisor or its affiliate. To the fullest extent permitted by applicable law, Franchisor and/or its affiliate reserve the right to establish maximum, minimum, or other pricing requirements with respect to Advertising Contracts. Moreover, Franchisor or its affiliate shall have ultimate discretion regarding whether to enter into any Advertising Contract. All Advertising Contracts, or other contracts related to the Publication, must be between Franchisor or its affiliate and the applicable Community, Industry Group, or advertiser, and Franchisee shall not be a party to, or a third-party beneficiary of, any such Advertising Contract or any
other contract relating to the Publication. Additionally, all fees and amounts payable under the Advertising Contracts must be paid directly to Franchisor or its affiliate or their designee, as applicable, in accordance with the terms thereof, and Franchisee must not accept any payments from any Community, Industry Group, or advertiser, nor shall Franchisee make payments on behalf of any Community, Industry Group, or advertiser for any reason. Franchisor may terminate this Agreement for Franchisee's failure to comply with the requirements set forth in this Section 5.E.(1). Franchisee shall not enter into Advertising Contracts or any other contract related to the Publication on Franchisor or its affiliate's behalf, and Franchisor and its affiliates are party to any Advertising Contract or any other contract related to the Publication, not Franchisee or its Principals.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the franchisor or its affiliate has ultimate discretion regarding whether to enter into any advertising contract. The franchisee is responsible for soliciting contracts for print and digital advertising, but the franchisor maintains control over the final decision.
This means that while a Belocal franchisee is responsible for finding and securing advertising contracts, the franchisor has the final say in accepting or rejecting those contracts. This could be due to pricing, terms, or other factors deemed important by Belocal. The franchisee must use the pricing and terms set by the franchisor or have written approval for any deviations.
Furthermore, all advertising contracts must be between the franchisor (or its affiliate) and the advertiser. The franchisee cannot be a party to these contracts and is not allowed to accept payments directly from advertisers. All payments must be made directly to the franchisor or its designee. Failure to comply with these requirements can result in termination of the franchise agreement.
This arrangement centralizes control over advertising contracts with Belocal, potentially ensuring consistency and quality across all franchises. However, it also means that franchisees have limited autonomy in finalizing deals they solicit, and must adhere strictly to the franchisor's guidelines and approval processes.