Under the Belocal franchise agreement, what is the basis for Belocal's decisions regarding actions it can take or withhold?
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 the right to make decisions or exercise discretion based on its judgment of what is in its best interests, including the best interests of its franchise network. This applies when Belocal has expressly reserved a right or discretion to take or withhold an action, or to grant or decline a franchisee's right to take or withhold an action.
Belocal's decisions are not limited by whether other reasonable alternatives exist, whether the decision promotes Belocal's financial interests, or whether the decision applies differently to different franchisees. Furthermore, Belocal's decisions are not limited by whether the decision is adverse to the franchisee's interests. The document stipulates that Belocal will not be liable to the franchisee for any such decision or action, provided there isn't an applicable statute to the contrary.
The franchise agreement specifies that the exercise of Belocal's rights or discretion is not subject to limitation or review. Even if applicable law implies a covenant of good faith and fair dealing, this covenant should not imply any rights or obligations inconsistent with a fair construction of the agreement's terms. The agreement grants Belocal the right to make decisions, take actions, and/or refrain from taking actions as long as they are consistent with the franchisee's rights and obligations under the agreement.