Nov 16, 2020 - Blog, Franchise Articles by |

If your franchise is up for renewal in 2021, you have an important decision to make: Will you seek to renew your franchise; or, is it time to move on? If you intend to renew your franchise, you will need to plan ahead; and, depending on when exactly your franchise agreement is set to expire, you may need to start planning now.

When Do You Need to Provide Notice of Your Intent to Renew?

In order to renew your franchise, you will need to provide your franchisor with notice of your intent to renew. The timeframe for providing this notice depends on the specific terms of your franchise agreement.

Most franchisors require their franchisees to provide notice by a certain date (i.e. no later than 60 days prior to the franchise agreement’s expiration date). However, some franchise agreements establish specific time windows as well (i.e. between 90 and 60 days prior to expiration). When providing notice of your intent to renew, you must ensure that you provide notice at the right time—and you must ensure that your notice satisfies the franchise agreement’s substantive requirements as well.

What are the Conditions for Renewal?

In addition to providing adequate notice, you will likely be required to satisfy various other conditions for renewal as well. For example, some of the most common types of renewal conditions include:

  • Being up-to-date on your royalty payments and marketing fund contributions;
  • Being in full compliance with the franchisor’s current system standards; and,
  • Paying a renewal fee.

If you are currently behind on your royalty payments or marketing fund contributions (or both), or if any aspect of your franchise is outdated or otherwise in non-compliance, you will want to address the issue now so that your franchisor cannot assert it as a basis for refusing your request to renew. The same goes for any other renewal conditions specified in your franchise agreement.

Will You Be Required to Sign a New Franchise Agreement?

Another common condition for renewal is an obligation to sign the franchisor’s “then-current” franchise agreement. If you will need to sign a new franchise agreement in order to renew, you will want to read the new agreement carefully and have it reviewed by a franchise lawyer. Franchisors regularly make changes to their franchise agreements—and these changes rarely benefit franchisees. At a minimum, you should seek the same changes you negotiated in your original franchise agreement, and you will need to work with your lawyer to determine what other changes are necessary in order to protect your investment during the renewal term.

Discuss Your Franchise Renewal with National Franchise Lawyer Jeffrey M. Goldstein

Will you need to submit a notice of intent to renew in 2021? If so, it will be important for you to work with an experienced franchise lawyer to protect your franchise. To schedule a free and confidential consultation with national franchise lawyer Jeffrey M. Goldstein, call us at 202-293-3947 or tell us how we can reach you online today.

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