Under the Belocal franchise agreement, what is the consequence if a receiver is appointed for a Belocal franchisee's assets by a court of competent jurisdiction?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
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- B. Automatic Termination. Franchisee shall be deemed to be in default under this Agreement, and all rights granted herein shall automatically terminate without notice to Franchisee if:
- (1) Franchisee becomes insolvent or makes a general assignment for the benefit of creditors;
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, if a court of competent jurisdiction appoints a receiver or other custodian for a franchisee's assets or property, or any part thereof, the franchise agreement will automatically terminate without notice to the franchisee. This is considered a default under the agreement.
This automatic termination clause has significant implications for a Belocal franchisee. The franchisee loses all rights granted under the franchise agreement immediately upon the appointment of a receiver. This could occur if the franchisee faces severe financial difficulties or legal challenges that lead a court to take control of their assets.
Belocal emphasizes that each obligation in the franchise agreement is material and essential, and failure to meet these obligations will significantly affect Belocal and its system. As a result, Belocal retains the right to exercise its rights and remedies, including termination, if the franchisee defaults. The franchisee is responsible for all liabilities, damages, costs, and expenses, including reasonable attorney's fees, incurred by Belocal due to any default by the franchisee under the agreement.