Under what conditions is the Belocal Wind-Down Damages fee payable?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee(1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Management Fee | 45% of monthly Cash Received, plus any expenses we incur in managing the Franchised Business | Monthly | Only payable in the event we must operate your franchise due to death, disability, defaults etc. The Management Fee is in addition to other fees due to us. |
| Customer Complaint Fee | Our costs and expenses associated with our response to and any resolution of a complaint | On demand | If an advertiser, client, or third party complains to us and you fail to satisfactorily remedy the complaint, you will pay us our costs and expenses associated with our response to and any resolution of the complaint. |
| Wind-Down Damages | An amount equal to the greater of (a) 6 months' worth of the average Royalty you paid for the 12 months prior to the default or (b) $2,500 | On demand | Only payable if you fail to comply with the wind-down procedures or abandon the Franchised Business. |
| Transfer Damages | Greater of 15% of transfer price or $25,000 | Within 15 days of our demand | You will pay these transfer damages if you do not comply with the transfer terms under the Franchise Agreement. |
Source: Item 6 — OTHER FEES (FDD pages 14–31)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, the Wind-Down Damages fee is payable if a franchisee fails to comply with the wind-down procedures or abandons the franchised business. The fee is an amount equal to the greater of (a) 6 months' worth of the average Royalty the franchisee paid for the 12 months prior to the default, or (b) $2,500. This fee is due on demand.
This means that if a Belocal franchisee decides to close their business or if Belocal terminates the franchise agreement due to the franchisee's default, the franchisee must follow specific procedures for winding down the business. If the franchisee fails to follow these procedures, or if they simply abandon the business without properly closing it, Belocal can charge them a Wind-Down Damages fee.
The fee is designed to compensate Belocal for the costs and damages they incur as a result of the franchisee's failure to properly wind down the business. The amount of the fee is calculated based on the franchisee's past royalty payments, ensuring that Belocal is compensated fairly for the potential loss of revenue. The franchisee will be responsible for paying whichever amount is greater between six months of royalties or $2,500.
Prospective Belocal franchisees should carefully review the wind-down procedures outlined in the Franchise Agreement to understand their obligations in the event they decide to close their business. They should also be aware of the potential costs associated with failing to comply with these procedures, including the Wind-Down Damages fee.