Under what circumstances might 360 Painting require the franchisee and transferee to execute the current franchise agreement?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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;
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 56)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, the franchisee may be required to execute the then-current form of the Franchise Agreement at the franchisor's option. This new agreement would completely replace the existing one and could include significantly different terms and conditions.
These changes could include, but are not limited to, additional fees or increases in existing continuing fees. The size or composition of the franchisee's protected territory could also be altered. The renewal Franchise Agreement might also specify the number of additional renewal terms and include mandatory minimum periodic royalty requirements. These royalty requirements would be determined by 360 Painting based on the current market, the maturity of the business, and its gross sales record during the term.
This clause gives 360 Painting considerable latitude to modify the franchise agreement upon renewal, potentially impacting the franchisee's costs, territory, and operational requirements. Prospective franchisees should carefully consider this aspect and discuss with 360 Painting the potential scope and impact of such changes during the renewal process.