What Happens When A Franchise Agreement Expires

Franchise relations laws in some states provide limited renewal protection for franchisees. For example, the laws require California and some other states to indicate that the franchisor does not want to extend. The answers to these questions depend on the language of your specific franchise agreement, although it is possible to identify some general principles: in addition, most agreements explain that franchising is a prerequisite for extending the term. If the franchisor has the right not to renew on this basis, check the agreement to see if, in such circumstances, it authorizes the franchisee to use the franchisor`s intellectual property and expressly excludes the exploitation of the retention, termination and confidentiality provisions after the expiry of the current term of the franchise agreement. Unfortunately, not all franchise relationships end by mutual agreement. What are the main reasons for terminating the franchise? If you decide not to renew it, you are also subject to the non-competition and non-invitation agreements included in your franchise agreement after termination. The magnitude of these alliances may well be a key factor in your decision to renew yourself or not. Most franchise agreements are with optional extension periods. So if it`s a 10-year contract around Grade 9, you and the franchisor will both decide if you want to extend a new term. A lot of attention is paid to what happens before and at the beginning of a franchised relationship, but what happens when it ends? It`s no surprise that the franchisor has the final say on who can buy your franchise. Therefore, even if you find a suitable buyer, the franchisor will judge whether he is an appropriate candidate for the takeover of your business. As a marginal remark, the Franchising Code of Conduct requires the franchisor to contact you at least six months before the expiry of your contract to let you know if they wish to renew or renew the contract. If your total duration is less than 6 months, you must only show up one month before the agreement expires.

As a general rule, there is a direction towards this decision. If you are a profitable franchisee following the system, there is no reason why a franchisor should not choose to renew your contract. Now you may have some requirements like updating your equipment or signage, but at the end of the day, they want their royalty flow from your business to continue as long as possible. At the same time, if you earn money and are happy, you will probably also want to extend your contract. If you decide to renew, one of the first things you need to make sure it`s not already too late to do so. Under the many conditions of the extension, most franchise agreements require that the franchisee (by a specific delivery method and specific address) be informed at least a minimum number of days before the expiry date. Some franchise agreements even have special renewal windows (for example. B you must inform between 120 and 60 days before the deadline).) Well, as a franchisee, your business is part of a larger system in which the author of the system – the franchisor, who owns the brand, intellectual property and “know-how” of the company`s management – and other franchisees also participates.