Under what conditions can Belocal reduce the scope of any covenant in the franchise agreement?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee and Principals further understand and agree that Franchisor shall have the right, in its sole discretion, to reduce the scope of any covenant set forth in this Section 7., or any portion thereof, without the consent of Franchisee or any
Principal, effective immediately upon notice to Franchisee or Principals, and Franchisee and Principals agree that they will promptly comply with any covenant as so modified. The time periods set forth in this Section 7 will be tolled for any period of noncompliance.
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, Belocal has the right to reduce the scope of any covenant within the franchise agreement. This reduction can be made at Belocal's sole discretion without needing the franchisee's or any principal's consent.
This change becomes effective immediately once notice is given to the franchisee or principals. The franchisee and principals are then obligated to promptly adhere to the covenant as it has been modified. Furthermore, the time periods specified in Section 7 of the franchise agreement, which likely pertain to the duration or enforcement of these covenants, will be suspended for any period during which there is noncompliance with the modified covenant.
This clause gives Belocal significant flexibility to adjust the restrictions placed on franchisees, potentially in response to changing market conditions or competitive threats. While this could benefit franchisees in some situations by removing overly burdensome restrictions, it also carries the risk that Belocal could unilaterally alter the agreement in a way that is detrimental to the franchisee's business. Prospective franchisees should carefully consider this provision and seek legal counsel to fully understand its implications.