Franchisees Should Consider Negotiating the Renewal Provisions of Their Franchise Agreement at the Time They Sign Their Initial Franchise Agreement

October 22, 2012, 1:44 PM

Virtually all franchise agreements contain provisions governing renewal; many require the franchisee to renew only by entering into the then-current franchise agreement offered by the franchisor. Franchisees should consider negotiating this provision at the time they sign their initial franchise agreement. Franchisees should certainly consider requesting that the monetary provisions of the franchise agreement (e.g., royalty, advertising fees, etc.) remain, during the renewal term of the franchise agreement, at the same level charged during the initial term of the franchise agreement.

In addition, other provisions of the initial franchise agreement (e.g., territorial exclusivity) may be equally important to the franchisee during the renewal term of the franchise agreement, and franchisees may want to negotiate for the preservation of such key provisions of the initial franchise agreement, during the renewal term, at the time they negotiate and sign the initial franchise agreement.

If you would like more information on negotiating a franchise agreement, contact Steve Story at sestory@kaufcan.com or 757/624-3257. --Stephen E. Story