Can the Continuing Fees for a 360 Painting franchise increase upon renewal?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
han nine months prior to the expiration of the Initial Term;
- (ii) Franchisee is not, when notice is given, and does not become prior to the expiration of the Initial Term, in default of any provision of this Agreement or any other agreement between Franchisee and Franchisor or its subsidiaries or affiliates or with any other creditor or supplier of the Business, and Franchisee must have consistently complied with all the terms and conditions of this Agreement and all such other agreements throughout their terms;
- (iii) Franchisee shall execute, at Franchisor's option, Franchisor's then-current form of Franchise Agreement, which Franchise Agreement shall supersede in all respects and may contain terms and conditions substantially different from those set forth herein, including, without limitation: (a) additional fees and/or an increase in any or all Continuing Fees (as such term is hereinafter defined), (b) a change in the size or composition of the Protected Territory, (c) the renewal Franchise Agreement shall only provide for the number of additional renewal terms called for by this Agreement, and (d) mandatory minimum periodic royalty requirements that, in Franchisor's determination, take into account the thencurrent market, the maturity of the Business and its record of Gross Sales during the term;
- (iv) Franchisee shall pay a renewal fee equal to twenty-five percent (25%) of the thencurrent Franchise Fee (as such term is hereinafter defined) or Fifteen Thousand ($15,000), whichever is greater; provided, however, that Franchisee shall not also be required to pay an initial franchise fee under such renewal Franchise Agreement;
- (v) Franchisee shall complete, at its own expense and to Franchisor's satisfaction, all maintenance, updating, refurbishing and replacement of the Vehicles and all maintenance, refurnishing, renovation, modernizing and remodeling of the Bu
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to the 2025 FDD, 360 Painting can modify the terms and conditions of the franchise agreement upon renewal, potentially including increased continuing fees. Specifically, 360 Painting has the option to require franchisees to execute the then-current form of the Franchise Agreement, which may contain terms substantially different from the original agreement.
These changes can include additional fees or increases to existing continuing fees. This means that when a franchisee renews their agreement, the costs associated with running the franchise could be higher than they were during the initial term. The new agreement could also change the size or composition of the Protected Territory and include mandatory minimum periodic royalty requirements.
In addition to potentially higher fees, franchisees must also pay a renewal fee equal to 25% of the then-current Franchise Fee or $15,000, whichever is greater. Franchisees are also responsible for updating, refurbishing, and remodeling the business to meet 360 Painting's current standards. To qualify for renewal, a franchisee must be current on all payments to 360 Painting and its affiliates and must have consistently met all obligations throughout the initial term.