Under what conditions can the Belocal franchisor require a mutual termination and release agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
In Franchisor's sole discretion, Franchisor may condition Franchisee's termination under this Section 10.E. upon the parties' execution of a mutual termination and release agreement in the form required by Franchisor and Franchisee's compliance with the wind-down procedures in the Franchise Brand Standards Manual, and Franchisee shall be required to comply with all of its post-termination obligations required in this Agreement.
If Franchisee fails to comply with the terms of the mutual termination and release agreement, abandons the Franchised Business prior to the date of mutual termination, or fails to comply with the winddown procedures in the Franchise Brand Standards Manual, Franchisor may charge the Wind-Down Damages defined in Section 10.J. below.
- F.
Consent to Mutual Termination.
Franchisee may request mutual termination during the Term of this Agreement.
Franchisor has no obligation to consent to such mutual termination.
If, in Franchisor's sole discretion, Franchisor consents to mutual termination, Franchisor may establish the termination date, which date shall be no earlier than fifteen days, and no later than ninety days, after the date Franchisor receives Franchisee's request for mutual termination.
Franchisor shall give Franchisee at least three days prior notice of the effective date of termination.
Franchisor, in its sole discretion and for any reason and no reason, has the right to accelerate the wind-down period and terminate this Agreement earlier than the termination date initially communicated to Franchisor, subject to the three days prior notice requirement, unless Franchisor has the right to immediately terminate this Agreement due to a default by Franchisee.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, Belocal, in its sole discretion, may require a franchisee to execute a mutual termination and release agreement as a condition of termination under Section 10.E of the franchise agreement. This is contingent upon the franchisee also complying with the wind-down procedures outlined in the Franchise Brand Standards Manual and fulfilling all post-termination obligations as specified in the agreement.
If a Belocal franchisee fails to adhere to the terms of the mutual termination and release agreement, abandons the franchised business before the agreed termination date, or does not comply with the wind-down procedures detailed in the Franchise Brand Standards Manual, Belocal has the right to charge wind-down damages, as defined in Section 10.J of the franchise agreement.
This means that while a franchisee can request a mutual termination, Belocal is under no obligation to grant it. If Belocal consents, it has the authority to set the termination date, which must be between 15 and 90 days after receiving the franchisee's request. Belocal must provide the franchisee with at least three days' notice before the termination date. Belocal also retains the right to accelerate the wind-down period, terminating the agreement sooner than initially communicated, provided they give three days' notice, unless the termination is due to the franchisee's default, in which case immediate termination is possible.