Is an All States M.E.D. franchisee required to pay the then-current franchise fee when renewing for a successor franchise?
All_States_M_E_D Franchise · 2024 FDDAnswer from 2024 FDD Document
ment between Franchisee and Franchisor;
- 4.2.5 Franchisee has given written notice of its intent to operate a successor franchise to Franchisor not less than nine (9) months nor more than twelve (12) months prior to the end of the term of this Agreement;
- 4.2.6 Franchisee has executed Franchisor's then-current form of franchise agreement (or has executed other documents at Franchisor's election that modify this Agreement to reflect the fact that the Franchise Agreement relates to the grant of a successor franchise), which franchise agreement shall supersede this Agreement in all respects, and the terms of which may differ from the terms of this Agreement by requiring, among other things, a different percentage Royalty Fee; provided, however, that Franchisee shall not be required to pay the then-current Franchise Fee;
- 4.2.7 Franchisee has complied with Franchisor's then-current qualifications for a new franchisee and has agreed to comply with any training requirements;
- 4.2.8 Franchisee has executed a general release, in a form the same as or similar to the General Release attached as Schedule 1, of any and all claims against Franchisor, any Affiliate and against their officers, directors, shareholders, managers
Source: Item 23 — RECEIPTS (FDD pages 44–174)
What This Means (2024 FDD)
According to All States M.E.D.'s 2024 Franchise Disclosure Document, a franchisee is not required to pay the then-current franchise fee when renewing for a successor franchise. However, to qualify for a successor franchise, the franchisee must meet several preconditions. These include full compliance with all material provisions of the existing agreement throughout its term, making necessary capital expenditures to maintain uniformity with All States M.E.D.'s system standards, and satisfying all monetary obligations to All States M.E.D.. The initial franchise agreement has a term of ten years, with the option to enter into a new franchise agreement for successive ten-year terms.
Additional preconditions for renewal include not being in default of any agreement with All States M.E.D., providing written notice of intent to renew between nine and twelve months before the end of the current term, and executing All States M.E.D.'s then-current form of franchise agreement. This new agreement may have different terms, such as a different royalty fee percentage. The franchisee must also meet All States M.E.D.'s current qualifications for new franchisees, agree to any training requirements, and execute a general release of claims against All States M.E.D..
Finally, the franchisee must pay a renewal fee of $10,000. Meeting these conditions ensures the franchisee's eligibility for a successor franchise without having to pay the full initial franchise fee again. This provides a significant benefit for existing franchisees who maintain good standing and wish to continue operating their All States M.E.D. franchise.