Can the Franchise Territory for an Afuri Ramen Dumpling franchise be modified upon renewal?
Afuri_Ramen_Dumpling Franchise · 2024 FDDAnswer from 2024 FDD Document
- 6.1.1 Renewal Franchise Agreement. If you are not in breach, you may renew the Franchise for periods of 10 years under the terms of our then-current Franchise Agreement forms. "Then-current," as used in this Agreement and applied to our Franchise Disclosure Document and Area Development Addendum will mean the form then currently provided to prospective franchisees or area developers, or if not then being provided, then the form we select in our sole discretion which previously has been delivered to and executed by a franchisee of ours (with appropriate modifications to reflect the fact that the agreement relates to the grant of a renewal franchise). These forms may vary materially from this Agreement. Royalty Fees, Advertising Fees, and other fees will be set at the then prevailing rates and terms. Your failure or refusal to execute the renewal Franchise Agreement forms within 30 days after delivery to you may be regarded as an election by you not to renew. Upon renewal, the Franchise Territory may be modified and its geographic area may be reduced or expanded to meet our then-current franchise market penetration and demographic standards.
Source: Item 23 — Receipts (FDD pages 50–189)
What This Means (2024 FDD)
According to Afuri Ramen Dumpling's 2024 Franchise Disclosure Document, the franchise territory can be modified upon renewal of the franchise agreement. Specifically, the geographic area of the territory may be reduced or expanded. This modification is based on Afuri Ramen Dumpling's then-current franchise market penetration and demographic standards.
This means that when a franchisee seeks to renew their franchise agreement, the territory they originally operated in might not remain the same. Afuri Ramen Dumpling has the right to adjust the territory size based on how well the market is penetrated and the demographic data at the time of renewal. This could either benefit or disadvantage the franchisee. A smaller territory could mean less potential customer base, while a larger territory could mean more responsibility and potentially higher operational costs.
It is important for prospective franchisees to understand that the terms of the renewal agreement, including territory size, will be based on Afuri Ramen Dumpling's current standards at the time of renewal, and these terms may vary significantly from the original agreement. The franchisee's failure to execute the renewal Franchise Agreement forms within 30 days after delivery may be regarded as an election by the franchisee not to renew the franchise.