Under what conditions can the Belocal agreement be immediately terminated?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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- C. Termination on Notice; No Cure. Franchisor may terminate this Agreement immediately upon written notice to Franchisee, without an opportunity to cure, if:
- (1) Franchisee abandons or otherwise ceases operations of the Franchised Business contemplated by this Agreement;
- (2) Franchisee or any Principal transfers or attempts to transfer any interest in this Agreement, Franchisee, or the Franchised Business in violation of Section 9. of this Agreement;
- (3) Franchisee or any Principal uses the Copyrighted Materials or uses or discloses the Confidential Information in violation of this Agreement;
- (4) Franchisee or any Principal fails to comply with any of the covenants set forth in this Agreement, including those in Section 7.A to 7.D. relating to confidentiality and restrictions against unfair competition and solicitation;
- (5) Franchisee or any Principal misuses or makes any unauthorized use of the System or the Marks, or impairs the goodwill associated therewith or Franchisor's rights therein; or otherwise breaches the obligations set forth in Section 8;
- (6) Franchisee or any Principal makes any material misrepresentation to Franchisor or breaches any warranty or representation made to Franchisor, whether in this Agreement or otherwise;
- (7) Whether before or after the Effective Date, Franchisee or any Principal has been or is charged with, convicted of, or pleads nolo contendere to, a felony or indictable offense in any court, is subject to a judgment, default, lien, bankruptcy, or similar occurrence, becomes known to Communities, Industry Groups, or advertisers as being of bad moral character, disparages, embarrasses, or tarnishes Franchisor's reputation, or fails to comport itself at all times in accordance with the highest standards of conduct and behavior, consistent with its responsibilities as a franchisee;
- (8) For any N2 publication for which Franchisee is responsible, the total expenses, including Royalty and Publication Expenses (defined below), in a given month exceed the revenue actually received by Franchisor in that same month under the Advertising Contracts for that same publication;
- (9) Franchisee, any of its Principals, or any of its affiliates is in default under any other agreement with Franchisor or any of Franchisor's affiliates and fails to cure such default as provided for in such other agreement;
- (10) Franchisee or any Principal commits a second or subsequent event of default under this Agreement, whether or not such defaults are of the same or different nature and whether or not such defaults have been cured by Franchisee after notice by Franchisor;
- (11) Franchisee underreports its sales of Advertising Contracts;
- (12) Franchisee accepts any payments from any advertiser, Community, or Industry Group, or makes any payments on behalf of any advertiser, Community, or Industry Group for any reason;
- (13) Franchisee begins operations of the Franchised Business prior to receiving prior authorization from Franchisor;
- (14) Franchisee operates under any trademark not approved by Franchisor or otherwise uses any trademark not approved by Franchisor in the operation of the Franchised Business;
- (15) Franchisee defaults under Section 5.M.;
- (16) Franchisee fails to include the minimum number of pages in an issue (as determined by Franchisor's then-current standard) two or more times within a six-month period;
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, Belocal can terminate the franchise agreement immediately under several conditions, without providing an opportunity for the franchisee to cure the default. These conditions include the franchisee abandoning the business, transferring interests in the agreement without permission, misusing copyrighted material or confidential information, violating covenants related to confidentiality and unfair competition, misusing the Belocal system or marks, or making material misrepresentations to Belocal.
Additionally, Belocal can immediately terminate the agreement if a final judgment remains unsatisfied for 30 days or longer (unless a supersedeas bond is filed), if the franchisee is dissolved, if the agreement and franchised business are not transferred within six months of the death or disability of the franchisee or its principals (unless Belocal grants an extension), or if execution is levied against the franchisee's business or property. Furthermore, if a franchisee fails to meet requirements related to Business Improvement Plans or misuses Belocal's information technology systems, immediate termination is possible.
Another condition for immediate termination is if the Franchise Agreement between the franchisee and N2's affiliate, N2 Franchising, Inc., expires or terminates. Finally, Belocal retains the right to accelerate the wind-down period and terminate the agreement earlier than the initially communicated termination date if the franchisee defaults, subject to providing three days' prior notice, unless immediate termination is justified due to the default.
These termination conditions highlight the importance of strict adherence to the franchise agreement and Belocal's standards. A prospective franchisee should carefully review these conditions and understand the potential consequences of non-compliance, as they could lead to immediate termination and financial penalties.