Franchise Agreement Renewal Fee

Signing the current form of the franchise agreement – franchisees often believe that the conditions under which they currently work (including the royalty rate and the size of the territorial protection they could obtain) are set forever. Unfortunately, this is generally not the case, and in order for franchisees to renew their franchises, franchisors often require them to commit to the « current form of franchise agreement, » which may contain substantial differences in a franchise`s previous franchise agreement, including increased royalties, marketing and other fees. To prevent the franchisor from changing the essential terms of the franchise agreement during the renewal, we always try to negotiate changes to the franchise agreement to ensure that certain provisions remain the same in all future forms of the franchise agreement. B, for example the same royalties, marketing royalties and other fees, the same protected territory and all other important bargaining points that the franchisee could initially obtain. The definitions of the Franchise Code of Conduct (point 4) are important for understanding renewal rights and obligations. Franchisors could also consider requiring the franchisee to sign clause 10- legal and independent business advice certificates at the time of renewal and renewal, although there is no mandatory requirement under the code, so it can be proven that the franchisee has read and understood the revised documents, as they may be in a slightly different form from the original documents. , does not extend a conditional extension, so that the new franchise agreement is not identical to the existing agreement. If this happens (and it`s quite common!), there is sometimes a clause in the agreement that deals with what will happen if the parties let the agreement continue after the end of the term. If the franchisor does not agree to renew the existing contract or enter into a new agreement and the franchisee does not offer « genuine compensation » for goodwill, the franchisor will not be able, at the end of the contract, to impose non-compete clauses against the franchisee. Additional renewal fees – While most (but not all) franchise agreements grant the franchisee the right to renew, the number of renewals a franchisee can obtain varies considerably from a franchise agreement.