What relocation fee might Auntie Annes charge a franchisee for relocating their business?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
unless you are in compliance with all terms and conditions of this Agreement and you have the funds available to relocate the Franchised Business and construct a new Franchised Business according to our then-current design standards.
- B. Relocation Conditions. If we approve, in our sole discretion, the relocation of the Franchised Business under this Section 5.5, you agree to comply with the following conditions:
- (i) the new location will be considered the "Accepted Location" as used in this Agreement;
- (ii) all Site Agreements you enter into to secure the new location must comply with Section 5.4 (Site Acquisition);
- (iii) you must make or cause to be made to the former Accepted Location such changes in the signs and interior and exterior of the former Accepted Location so as to effectively distinguish such location from any other Business;
- (iv) we may charge you a relocation fee equal to 10% of the then-current Initial Franchise Fee to cover costs incurred by us in connection with any such acceptance, evaluation, and relocation of the Franchised Business;
- (v) we may require you to pay an agreed minimum royalty to us during the period in which the Franchised Business is not in operation (if any); and
- (vi) we may require you to sign our then-current form of franchise agreement to replace this Agreement (the "New Franchise Agreement") or any other documents we may require to amend this Agreement. You acknowledge and ag
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, if a franchisee relocates their business, Auntie Annes has the right to charge a relocation fee. This fee is calculated as 10% of the then-current Initial Franchise Fee. This fee is intended to cover the costs incurred by Auntie Annes for the acceptance, evaluation, and relocation process of the franchised business.
In addition to the relocation fee, Auntie Annes may also require the franchisee to make specific changes to the former location to distinguish it from an Auntie Annes business. They may also require the franchisee to pay a minimum royalty during any period when the franchise is not operational during the relocation.
Furthermore, Auntie Annes may require the franchisee to sign the then-current form of the franchise agreement, which may contain terms that are materially different from the original agreement. However, the franchisee will not be required to pay another initial franchise fee if they sign a new franchise agreement. If the lease term for the new location extends beyond the original term, Auntie Annes may extend the agreement's term to match the lease term, requiring a relocation extension fee of $1,500 multiplied by the number of years between the original expiration date and the new lease expiration.