Under the Belocal franchise agreement, does the termination clause apply to misrepresentations made before the effective date?
Belocal Franchise · 2025 FDDAnswer from 2025 FDD Document
(6) Franchisee or any Principal makes any material misrepresentation to Franchisor or breaches any warranty or representation made to Franchisor, whether in this Agreement or otherwise;
(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, the termination clause within the franchise agreement does apply to misrepresentations made before the effective date. Specifically, the agreement states that the franchisor can terminate the agreement if the franchisee or any principal makes any material misrepresentation to Belocal, regardless of whether the misrepresentation occurs before or after the effective date of the agreement.
This means that a prospective Belocal franchisee needs to ensure that all information provided to Belocal during the application and agreement process is accurate and truthful. Any false statements or omissions, even if unintentional, could lead to termination of the franchise agreement. This condition underscores the importance of due diligence and transparency when entering into a franchise agreement with Belocal.
This type of clause is relatively common in franchise agreements, as franchisors need to rely on the information provided by franchisees to make informed decisions. The inclusion of 'before or after the Effective Date' simply clarifies that Belocal considers pre-agreement misrepresentations as seriously as those made after the franchise is operational.