Under the Belocal franchise agreement, what specific section outlines the restrictions on transferring interest in the Belocal franchise?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 22: CONTRACTS]
By Franchisee.
Franchisee shall not transfer or assign this Agreement without Franchisor's prior written consent.
Any purported assignment or transfer, by operation of law or otherwise, made in violation of this Agreement shall be null and void and shall constitute a material breach under this Agreement.
For purposes of this Agreement, the term "transfer" shall mean any issuance, sale, assignment, gift, pledge, mortgage or any other encumbrance, transfer by bankruptcy, transfer by judicial order, merger, consolidation share exchange, or transfer by operation of law or otherwise, whether direct or indirect, voluntary or involuntary.
Any ownership or structural changes in Franchisee (including but not limited to, any merger; reorganization; transfer of shares, stock, or interests among owners; or issuance of additional shares or classes of stock or additional partnership interests) shall constitute and be deemed a transfer.
If Franchisee wishes to transfer all or part of its interest in the Franchised Business or this Agreement or in substantially all of the assets of the Franchised Business, or if Franchisee or any Principal wishes to transfer any ownership interest in Franchisee, transferor and the proposed transferee must apply to Franchisor for its consent.
Franchisee agrees to submit to Franchisor all information Franchisor may require in order to determine whether to approve a proposed transfer of the Franchised Business, and Franchisor agrees to notify Franchisee of its approval or disapproval within a reasonable period of time, not to exceed 30 days, after Franchisor has received all requested information relating to any proposed transfer of the Franchised Business.
A marketing list, client list or potential client list may be transferred only to a transferee to whom Franchisee's rights and obligations under this Agreement are simultaneously being transferred in accordance with the terms hereof.
If Franchisor does not exercise its rights under Section 9.C or Section 9.D, the decision as to whether to approve a proposed transfer shall be made by Franchisor in its sole discretion and shall include numerous factors deemed relevant by Franchisor.
These factors may include, but shall not be limited to, the following:
Source: Item 22 — CONTRACTS (FDD page 71)
What This Means (2025 FDD)
According to Belocal's 2025 Franchise Disclosure Document, Item 22 discusses the contracts related to the franchise agreement, including the restrictions on transferring interest in the Belocal franchise. Specifically, it states that the franchisee cannot transfer or assign the agreement without Belocal's prior written consent. Any attempt to do so without consent is considered a material breach of the agreement and will be void.
The term "transfer" is broadly defined, encompassing various methods such as sale, assignment, gift, pledge, mortgage, bankruptcy, judicial order, merger, consolidation, share exchange, or any other direct or indirect transfer, whether voluntary or involuntary. Changes in the franchisee's ownership or structure, including mergers, reorganizations, or transfers of shares, are also considered transfers.
If a franchisee wishes to transfer any interest in the franchised business, they must apply to Belocal for consent, providing all necessary information. Belocal has a reasonable period, not exceeding 30 days after receiving all requested information, to approve or disapprove the proposed transfer. If Belocal doesn't exercise its rights of first offer or refusal, the decision to approve the transfer is at Belocal's sole discretion, considering various factors. The transferor remains liable for all obligations incurred before the transfer date and must pay a transfer fee equal to the then-current initial franchise fee, plus Belocal's attorney fees. The franchisee must also ensure all creditors and suppliers are paid in full before the transfer.