Item 17 - RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION

Item 17 provides an index of important provisions of the Franchise Agreement, including the length of the franchise term and the conditions for renewal, extension or termination of the Agreement.

Objectives
  • Locate and review important details about your potential relationship with the franchisor.
  • Verify the transfer and assignment fees. The amount of these fees will vary from franchisor to franchisor and are intended to reimburse the franchisor for its legal costs from reviewing the contracts, etc.
  • Verify the franchise renewal fees. The franchisor should incur minimal legal and administrative costs when you renew, so the renewal fee should be minimal as well.
Important Considerations
  • How long is the initial franchise term?
  • Can you renew the Franchise Agreement? If so, to what extent and upon what terms?
  • What are your requirements, obligations and options available when the Franchise Agreement ends?
  • Most franchisors offer a first right of refusal for the sale and assignment of the franchise rights to another franchisee.
  • Does the state where the franchise will be located have rights in the case of a dispute or litigation?
  • Can the franchisor terminate without cause?