Under what circumstances would a Belocal franchisee be required to reimburse the franchisor for Notification and Remediation Related Costs associated with a Security Breach?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee shall reimburse Franchisor for all reasonable Notification and Remediation Related Costs (as defined below) incurred by Franchisor arising out of or in connection with any such Security Breach that is directly or indirectly caused by Franchisee, its Principals, and its Independent Staff. "Notification and Remediation Related Costs" shall mean Franchisor's internal and external costs associated with addressing and responding to any Security Breach, including but not limited to: (i) preparation and mailing or other transmission of legally required notifications to affected individuals, regulators, and attorneys general; (ii) preparation and mailing or other transmission of such other communications to customers, agents, or others as Franchisor deems reasonably appropriate; (iii) establishment of a call center or other communications procedures in response to such Security Breach (e.g., customer service FAQs, talking points, and training); (iv) engagement of information technology consultants, public relations, and other similar crisis management services; (v) payment of legal and accounting fees and expenses associated with Franchisor's investigation of and response to such Security Breach; and (vi) payment of costs for commercially reasonable credit reporting services that are associated with legally required notifications or are advisable under the circumstances.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a franchisee is required to reimburse Belocal for Notification and Remediation Related Costs associated with a Security Breach if the breach is directly or indirectly caused by the franchisee, its principals, or its independent staff. These costs encompass Belocal's internal and external expenses related to addressing and responding to the security breach.
Notification and Remediation Related Costs include the preparation and transmission of legally required notifications to affected individuals, regulators, and attorneys general, as well as other communications to customers or agents deemed appropriate by Belocal. These costs also cover the establishment of call centers, engagement of IT consultants and public relations firms, payment of legal and accounting fees for investigating and responding to the breach, and the costs for commercially reasonable credit reporting services associated with legally required notifications.
This means that if a Belocal franchisee's actions or negligence lead to a security breach, the franchisee will be financially responsible for covering all the associated costs incurred by Belocal in addressing the issue. This could potentially involve significant expenses, depending on the scale and impact of the breach, highlighting the importance of franchisees maintaining robust security measures and adhering to data protection policies to prevent such incidents.