Under the Belocal franchise agreement, does pleading 'nolo contendere' to a felony have the same consequences as a conviction?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
- (7) Whether before or after the Effective Date, Franchisee or any Principal has been or is charged with, convicted of, or pleads nolo contendere to, a felony or indictable offense in any court, is subject to a judgment, default, lien, bankruptcy, or similar occurrence, becomes known to Communities, Industry Groups, or advertisers as being of bad moral character, disparages, embarrasses, or tarnishes Franchisor's reputation, or fails to comport itself at all times in accordance with the highest standards of conduct and behavior, consistent with its responsibilities as a franchisee;
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, pleading 'nolo contendere' (no contest) to a felony is treated the same as a conviction under the franchise agreement. Specifically, if a franchisee or any principal has been charged with, convicted of, or pleads nolo contendere to a felony, it can be grounds for default under the agreement. This applies regardless of whether the event occurs before or after the effective date of the agreement.
This provision gives Belocal significant latitude to terminate the franchise agreement if a franchisee or principal is involved in a felony case, even if they are not formally convicted but simply enter a plea of 'nolo contendere'. This type of plea often carries the same penalties as a guilty plea but does not constitute an admission of guilt for other legal purposes. However, Belocal treats it as equivalent to a conviction for franchise agreement purposes.
For a prospective Belocal franchisee, this means that any past or present felony charges or pleas, even those not resulting in a conviction, could jeopardize their franchise. It is crucial to disclose any such history to Belocal during the application process. Furthermore, maintaining a clean legal record is essential throughout the term of the franchise agreement to avoid potential default and termination. This clause highlights the importance of integrity and adherence to the law for anyone associated with a Belocal franchise.