Under what conditions does Belocal have no liability to the franchisee for a decision or action?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) Whenever Franchisor has expressly reserved in this Agreement, or is deemed to have a right and/or discretion to take or withhold an action, or to grant or decline to grant Franchisee a right to take or withhold an action, then except as otherwise expressly and specifically provided in this Agreement, Franchisor may make its decision or exercise its right and/or discretion on the basis of Franchisor's judgment of what is in Franchisor's best interests, including, without limitation, Franchisor's judgment of what is in the best interests of Franchisor's franchise network at the time Franchisor's decision is made or Franchisor's right or discretion is exercised, without regard to whether: (i) other reasonable alternative decisions or actions could have been made by Franchisor; (ii) Franchisor's decision or the action Franchisor takes promotes its financial or other individual interest; (iii) Franchisor's decision or the action Franchisor takes applies differently to Franchisee and one or more other franchisees or Franchisor's internal operations or its affiliates' operations; or (iv) Franchisor's decision or the exercise of Franchisor's right or discretion is adverse to Franchisee's interests.
In the absence of an applicable statute, Franchisor shall have no liability to Franchisee for any such decision or action.
Franchisor and Franchisee intend that the exercise of Franchisor's right or discretion shall not be subject to limitation or review.
If applicable law implies a covenant of good faith and fair dealing in this Agreement, Franchisor and Franchisee agree that such covenant shall not imply or impute any rights or obligations that are inconsistent with a fair construction of the terms of this Agreement and that this Agreement grants Franchisor the right to make decisions, take actions, and/or refrain from taking actions not inconsistent with Franchisee's rights and obligations hereunder.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, Belocal has no liability to the franchisee for a decision or action if there isn't an applicable statute. This stems from Belocal's right to make decisions or exercise discretion based on its judgment of what is in its best interests, including the interests of its franchise network.
This means that Belocal can make decisions that affect individual franchisees differently, or that promote Belocal's financial interests, without necessarily being liable for adverse effects on a franchisee's business. The FDD clarifies that Belocal's decisions aren't subject to review based on whether other reasonable alternatives existed or whether the decision benefits Belocal more than the franchisee.
This clause emphasizes that Belocal intends to have broad discretion in its decision-making, free from extensive legal challenges. The agreement also states that if any law implies a covenant of good faith and fair dealing, it should not be interpreted in a way that contradicts Belocal's right to make decisions that are consistent with the franchisee's rights and obligations under the agreement.