Under what condition is a Belocal franchisee or principal allowed to own securities of a publicly traded company that may be considered a competitor?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Nothing herein shall prohibit Franchisee or any Principal from owning, solely as an investment, securities of any Person traded on any national securities exchange if neither Franchisee nor any Principal controls, or is a member of a group which controls, such Person and does not, directly or indirectly, own 5% or more of any class of securities of such Person.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, a franchisee or principal is permitted to own securities of a publicly traded company that may be considered a competitor under specific conditions. This exception allows for passive investment without active control or significant ownership.
Specifically, the franchisee or any principal can own securities of a person traded on any national securities exchange if the ownership is solely as an investment. This allowance is contingent on neither the franchisee nor any principal controlling, or being part of a group that controls, the person whose securities are owned.
Furthermore, the franchisee or principal must not directly or indirectly own 5% or more of any class of securities of that person. This provision ensures that the franchisee's or principal's interest remains purely as an investment without the ability to influence the competitive entity. This exception is designed to prevent conflicts of interest while still allowing franchisees and principals to participate in the stock market.