Under the Belocal franchise agreement, is the Belocal franchisee required to reimburse the franchisor for losses and expenses?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
In the event Franchisor exercises its step-in rights in accordance with the terms of this Agreement, Franchisee must (in addition to paying all other amounts owed due under this Agreement) pay to Franchisor an additional fee of 45% of the monthly Cash Received, plus any
expenses Franchisor or a third party incurs in managing the Franchised Business ("Management Fee"). The Franchisee shall pay the Management Fee for as long as the Franchisor or the third-party manager is managing the Franchised Business. The Management Fee is due monthly. If Franchisor (or a third-party manager it appoints) undertakes to manage the Franchised Business pursuant to the exercise of Franchisor's step-in rights, Franchisee Indemnifying Parties agree to indemnify and hold Indemnitees and the third-party manager, if any (and Franchisor's and any third-party manager's affiliates, representatives, and employees) harmless from and against any fines, claims, suits or proceedings which may arise out of Franchisor's or the third-party manager's management of the Franchised Business. Franchisor, or the third-party manager, as applicable, shall have a duty to utilize only reasonable efforts to operate the Franchised Business and shall not be liable to Franchisee, any Principal, or any of their respective heirs, beneficiaries, or devisees for any debts, losses, or obligations the Franchised Business incurs, or to any of Franchisee's or its Principals' creditors for any products, other assets, or services the Franchised Business purchases, while Franchisor or the third-party manager manages the Franchised Business.
Franchisee shall reimburse Franchisor and/or its affiliate for any costs Franchisor and/or its affiliate incur to enforce advertising contracts entered into in connection with the Publication.
Accordingly, Transferor, each Transferor Principal, Transferee, and each Transferee Principal hereby agree to, and will at all times, indemnify and hold each of the Franchisor Releasees harmless, to the fullest extent permitted by law, from all losses and expenses incurred in connection with any action, suit, proceeding, claim, demand, investigation, or inquiry (formal or informal), or any settlement thereof (whether or not a formal proceeding or action has been instituted), which arises out of or is based upon the transactions contemplated by this Transfer Agreement. "Losses and expenses" include, without limitation, all losses, compensatory, exemplary, or punitive damages, fines, charges, costs, expenses, lost profits, reasonable attorneys' fees, investigative fees, court costs, settlement amounts, judgments, compensation for damages to Franchisor's reputation and goodwill, and other such amounts incurred in connection with such matters.
(2) Franchisee shall also notify Franchisor by telephone of any Action within fortyeight (48) hours after such Action is initiated and in writing within four (4) days after such Action is initiated. Indemnitees shall have the right, in their sole discretion, and at Franchisee's expense and risk, to: (1) retain counsel of their own choosing to represent them with respect to any claim, and (2) control the response thereto and the defense thereof, including the right to enter into settlements or take any other mitigating, remedial, corrective, or other actions they deem appropriate. Franchisee Indemnifying Parties must reimburse Indemnitees for all of Indemnitees' costs, expenses, and all attorneys' fees immediately upon Indemnitees' request. Franchisee Indemnifying Parties shall not, without the prior written consent of the Indemnitees, (A) settle or compromise any claim or consent to the entry of any judgment with respect to any claim which does not include a written release from liability of such claim for the Indemnitees, or (B) settle or compromise any claim in any manner that may adversely affect the Indemnitees. Franchisee Indemnifying Parties agree to give their full cooperation to Indemnitees in assisting with the defense of any such claim. Indemnitees' undertaking of defense and/or settlement shall in no way diminish Franchisee Indemnifying Parties' obligations to indemnify Indemnitees and to hold Indemnitees harmless. Under no circumstance shall Indemnitees be required to seek recovery from any insurer or other third party or otherwise mitigate Indemnitees' or the third parties' losses to maintain a claim for indemnification against Franchisee Indemnifying Parties. Franchisee Indemnifying Parties agree that any failure to pursue recovery
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, franchisees may be required to reimburse the franchisor for certain losses and expenses under specific circumstances. If Belocal exercises its step-in rights to manage the franchised business due to the franchisee's failure to comply with the agreement, the franchisee must pay a Management Fee, which includes 45% of the monthly Cash Received, plus any expenses Belocal or a third party incurs in managing the business. Additionally, the franchisee must indemnify Belocal and its affiliates from any claims arising out of Belocal's or a third-party manager's management of the franchised business.
Furthermore, Belocal franchisees are obligated to reimburse Belocal for any costs incurred to enforce advertising contracts related to the Publication. Franchisees are also required to indemnify Belocal against losses and expenses resulting from actions or claims tied to the transfer of the franchise agreement. This includes all losses, damages, fines, costs, attorney's fees, and settlement amounts.
In the event of any action initiated, the franchisee is responsible for all costs, expenses, and attorney's fees incurred by Belocal. Belocal has the right to retain counsel of their choosing and control the response to any claim at the franchisee's expense. These indemnification obligations highlight the importance of franchisees adhering to the franchise agreement and managing their business responsibly to avoid potential financial liabilities.