Under what conditions can the Intercompany License between Belocal and The N2 Company be terminated?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Our rights to the Marks and the proprietary System know-how are derived from a non-exclusive, perpetual license ("Intercompany License") between us and The N2 Company. The Intercompany License grants us the right to use the Marks and the proprietary information related to the System, such as the know-how and the Franchise Brand Standards Manual, for the purpose of licensing them to our franchisees and fulfilling our obligations under the Franchise Agreement. The Intercompany License is perpetual and terminable only for material breach of the Intercompany License agreement and only if we do not cure or begin to cure such breach within 90 days after notice. We and The N2 Company may also mutually agree to modify the terms of the Intercompany License. Termination of the Intercompany License will not change the effectiveness of any Franchise Agreement as long as you are not in default under such Franchise Agreement. We know of no other agreements currently in effect which significantly limit our rights to use or license the use of the Marks in any manner material to you.
Source: Item 13 — TRADEMARKS (FDD pages 44–46)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the Intercompany License between Belocal and The N2 Company, which grants Belocal the right to use trademarks and proprietary information, is perpetual but can be terminated under specific conditions. The license can be terminated if Belocal materially breaches the Intercompany License agreement and fails to cure or begin to cure the breach within 90 days after receiving notice of the breach. Additionally, Belocal and The N2 Company can mutually agree to modify the terms of the Intercompany License, which could potentially lead to its termination if both parties concur.
For a prospective franchisee, this means that Belocal's rights to use the trademarks and system are generally secure due to the perpetual nature of the license. However, there is a risk that a material breach by Belocal could jeopardize this license. It is important to note that even if the Intercompany License is terminated, the Franchise Agreement remains effective as long as the franchisee is not in default. This provides some security to the franchisee, ensuring their rights are maintained even if the relationship between Belocal and The N2 Company changes.
It is also worth noting that Belocal states that they know of no other agreements currently in effect which significantly limit their rights to use or license the use of the Marks in any manner material to you. This provides further assurance that the franchisee's use of the trademarks and system will not be affected by other agreements. However, Belocal is not obligated to protect the franchisee's rights to use the Marks or to protect them against claims of infringement or unfair competition, nor are they obligated to participate in the franchisee's defense or indemnify them for expenses or damages if they are party to an administrative or judicial proceeding involving the Marks. This means that the franchisee may have to bear the costs of defending their right to use the Marks if they are challenged.