Under what circumstances will the Belocal franchise agreement automatically terminate without notice to the franchisee?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. Automatic Termination. Franchisee shall be deemed to be in default under this Agreement, and all rights granted herein shall automatically terminate without notice to Franchisee if:
- (1) Franchisee becomes insolvent or makes a general assignment for the benefit of creditors;
- (2) Franchisee files a voluntary petition under any section or chapter of federal bankruptcy law or under any similar law or statute of the United States or any state thereof;
- (3) an involuntary petition is filed with respect to Franchisee under any such laws and is not dismissed within 60 days after it is filed;
- (4) Franchisee admits in writing its inability to pay its debts when due;
- (5) Franchisee is adjudicated as bankrupt or insolvent in proceedings filed against Franchisee under any section or chapter of federal bankruptcy laws or under any similar law or statute of the United States or any state;
- (6) a bill in equity or other proceeding for the appointment of a receiver of Franchisee or other custodian for Franchisee's business or assets is filed and consented to by Franchisee;
- (7) a receiver or other custodian (permanent or temporary) of Franchisee's assets or property, or any part thereof, is appointed by any court of competent jurisdiction;
(8) proceedings for a composition with creditors under any state or federal law should be instituted by or against Franchisee;
(9) a final judgment remains unsatisfied or of record for 30 days or longer (unless supersedeas bond is filed);
(10) Franchisee is dissolved;
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the franchise agreement will automatically terminate without notice to the franchisee under specific circumstances related to financial instability and legal proceedings.
The agreement terminates automatically if the franchisee becomes insolvent or makes a general assignment for the benefit of creditors. It also terminates if the franchisee files a voluntary petition under federal bankruptcy law or similar statutes, or if an involuntary petition is filed and not dismissed within 60 days. An admission in writing of the inability to pay debts when due, adjudication as bankrupt or insolvent, or consenting to the appointment of a receiver also trigger automatic termination.
Further, the appointment of a receiver for the franchisee's assets, institution of proceedings for composition with creditors, or a final judgment remaining unsatisfied for 30 days or longer (unless a supersedeas bond is filed) will result in automatic termination. Finally, the franchise agreement will automatically terminate if the franchisee is dissolved. These conditions highlight the critical importance of maintaining financial stability and adhering to legal obligations to avoid involuntary termination of the Belocal franchise agreement.