Can Afuri Ramen Dumpling refuse to renew a franchise agreement, and under what conditions?
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, a franchisee may renew their franchise for additional 10-year periods if they are not in breach of the existing agreement. The renewal will be under the terms of Afuri Ramen Dumpling's then-current Franchise Agreement forms, which may differ materially from the original agreement. This includes potential changes to Royalty Fees, Advertising Fees, and other fees, which will be set at the prevailing rates and terms at the time of renewal.
To complete the renewal, the franchisee must execute the renewal Franchise Agreement forms within 30 days of receiving them. Failure to do so may be considered an election not to renew the franchise. Additionally, upon renewal, Afuri Ramen Dumpling has the right to modify the Franchise Territory, potentially reducing or expanding its geographic area to align with their current market penetration and demographic standards.
In effect, while Afuri Ramen Dumpling offers the possibility of renewal, the terms can change significantly, and the territory is subject to adjustment. A prospective franchisee should carefully consider that the conditions of operating under a renewed agreement could be substantially different from the original terms. It is important to seek clarification on what these changes might entail to make an informed decision about the long-term viability of the franchise.