Franchise Renewals

Franchise law attorney Ashley Nielsen focuses her practice on representing franchisees. In addition to helping prospective franchisees, she provides legal services to existing franchisees on matters relating to the franchise, including renewal of the franchise agreement.

Before starting her own law firm, Ashley gained years of experience in franchise law. Her practice included representing both franchisors and franchisees, which provides her with crucial insight into both sides of the franchise relationship. She draws on that broad perspective to advise prospective and current franchisees. Ashley works with clients throughout the United States.

Franchise Renewal Process

A franchise agreement does not last forever. The contract between you and the franchisor includes provisions that establish the term of the arrangement, which is often 10 or 20 years.

The agreement also likely states express conditions for renewal, including the timing for you to notify the franchisor in writing of your wish to renew the franchise. The notice requirement usually is six to 12 months before the end of the initial franchise term. Missing the deadline may result in waiver of right to renew. The agreement also may contain specific conditions that apply to renewal of the franchise.

After you notify the franchisor of your intention to renew, you typically receive a new FDD and a copy of the then-current franchise agreement for execution. You must review these documents in the same careful way that you reviewed the initial FDD and Franchise Agreement. You should have your own legal counsel review the documents and discuss them with you. If you simply sign the new agreement without understanding the new provisions that apply to your franchise, you may be caught unaware of significant legal changes in your franchise arrangement.

Just as the franchisor has a legal team to support their operations, you should have your own trusted advisor who protects your interests. Ashley Nielsen has the experience and skills to counsel and represent you through the renewal process.

Effect of Franchise Renewal

Signing a new agreement to renew your franchise can substantially impact your business operations. When you work with Ashley Nielsen on the renewal, she identifies differences between your original agreement and the new agreement and can help you negotiate some of the terms if necessary. It’s especially important for you to know of changes in legal rights you have under the initial agreement that may not carry over under the new one. Ashley’s analysis of the new contract includes identifying those types of changes and discussing them with you.

The new agreement may change key provisions in your legal arrangement with the franchisor, such as franchise royalty rates, marketing fees, investment requirements, and the description of protected territory. In some cases, provisions in the new agreement may trigger requirements for updating systems, appearance, brand compliance, or other aspects of your operations. When Ashley reviews the new agreement and compares it to the original contract, she helps you assess the impact of terms of the new agreement on your business.

Successful Franchise Renewal

Whether to renew a franchise is entirely your decision, but the franchisor also has control over the process under the terms of your existing agreement. If your business is successful and you are compliant with the terms of the current agreement, the franchisor likely will want to renew the franchise. However, if you have experienced difficulties with compliance and in your relationship, the franchisor may use renewal as an opportunity to terminate the franchise. In that case, Ashley Nielsen can help you develop an exit strategy.

You must meet all the conditions of renewal established by your current franchise agreement, as well as operating requirements contained in the new agreement. Typical franchise renewal conditions include:

  • Written notification of desire to renew, as required in current agreement
  • Being in compliance with the terms of the existing agreement
  • Payment of a renewal fee
  • A current lease on your location (if applicable)
  • Completion (or a time-line for completion) of required upgrades to new standards and specifications

Beginning the renewal process early is a good way to improve your chances of securing renewal. Being in good standing throughout the term of the existing agreement and having a positive relationship with the franchisor increase your chances of negotiating a renewal. If there are outstanding issues, you will need to resolve them during the renewal process.

Ashley Nielsen draws on her years of experience as a franchise law attorney to help franchisees with renewal. She serves as a trusted advisor to prospective and current franchisees, providing sound advice before franchise purchase and throughout the term of a franchise.

Contact Ashley Nielsen

To talk with Ashley Nielsen about franchise renewal, please call (919) 335-3815 or use the online contact form. Nielsen Franchise Law also welcomes inquiries from referring attorneys, franchise brokers, and other professionals.