Under the Belocal franchise agreement, what constitutes 'abandonment' of the Belocal franchised business?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
- C.
Termination on Notice; No Cure.
Franchisor may terminate this Agreement immediately upon written notice to Franchisee, without an opportunity to cure, if:
(1) Franchisee abandons or otherwise ceases operations of the Franchised Business contemplated by this Agreement;
A. Prior to the closing of a transfer of the Franchised Business or expiration of this Agreement, Franchisee shall comply with Franchisor's instructions regarding the wind-down of Franchisee's operations, comply with the wind-down procedures in the Franchise Brand Standards Manual, and cooperate in good faith with Franchisor, its affiliates, and their representatives during the wind-down period, including meeting digitally or in-person if requested. For the avoidance of doubt, Franchisee has an obligation to continue to operate the Franchised Business until the closing of the transfer or the expiration date. If Franchisee abandons the Franchised Business prior to the closing of the transfer or the expiration date or fails to comply with the wind-down procedures in the Franchise Brand Standards Manual, Franchisee shall be in default under this Agreement and Franchisor may charge the Wind-Down Damages.
Therefore, Franchisee and Franchisor agree that a reasonable estimate of those damages (as liquidated damages and not as a penalty) is an amount equal to the greater of six months' worth of the average Royalty Franchisee paid for the prior 12 months or $2,500 ("Wind-Down Damages").
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, abandonment occurs if the franchisee abandons or otherwise ceases operations of the franchised business. This gives Belocal the right to terminate the franchise agreement immediately by providing written notice, without giving the franchisee an opportunity to correct the situation.
Additionally, if a Belocal franchisee abandons the franchised business before the effective termination date set by Belocal or does not follow the wind-down procedures outlined in the Franchise Brand Standards Manual, this is also considered a default under the agreement. In this case, Belocal has the right to immediately terminate the agreement and charge wind-down damages.
These wind-down damages are defined as the greater of six months' worth of the average royalty the franchisee paid for the prior 12 months or $2,500. Belocal can deduct or withhold these damages from the franchisee's commissions or transfer the damages via EFT from the franchisee to Belocal. It is important for a prospective franchisee to understand these financial implications in case they consider discontinuing operations before the agreement's natural expiration.