In Michigan, what is Beauty Bungalows required to do if they refuse to renew a franchise?
Beauty_Bungalows Franchise · 2025 FDDAnswer from 2025 FDD Document
Each of the following provisions is void and unenforceable if contained in any documents relating to a franchise:
- (d) A provision that permits us to refuse to renew your Franchise without fairly compensatingyou by repurchase or other means for the fair market value at the time of expiration of your inventory, supplies, equipment, fixtures, and furnishings.
Personalized materials which have no value to us and inventory, supplies, equipment, fixtures, and furnishings not reasonably required in the conduct of the Franchise business are not subject to compensation.
This subsection applies only if: (i) the term of the Franchise is less than five years; and (ii) you are prohibited by the Franchise Agreement or other agreementfrom continuing to conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising, or other commercial symbol in the same area subsequent to the expiration of the Franchise or you do not receive at least six months' advance notice of our intent not to renew the Franchise.
- (e) A provision that permits us to refuse to renew a Franchise on terms generally available to other franchisees of the same class or type under similar circumstances.
This section does not require a renewal provision.
Source: Item 22 — CONTRACTS (FDD pages 47–48)
What This Means (2025 FDD)
According to Beauty Bungalows' 2025 Franchise Disclosure Document, Michigan law includes specific stipulations regarding franchise non-renewal. If Beauty Bungalows chooses not to renew a franchise in Michigan, they are required to fairly compensate the franchisee. This compensation must be provided through repurchase or other means, reflecting the fair market value of the franchisee's inventory, supplies, equipment, fixtures, and furnishings at the time the franchise agreement expires.
However, there are exceptions to this compensation requirement. Beauty Bungalows is not obligated to compensate for personalized materials that hold no value for them, or for inventory, supplies, equipment, fixtures, and furnishings that are not reasonably required for conducting the franchise business.
This compensation requirement applies only under specific conditions: first, the franchise term must be less than five years. Second, the franchisee must be prohibited by the franchise agreement or other agreement from continuing to operate a similar business under a different brand in the same area after the franchise expires. Alternatively, the compensation requirement applies if the franchisee does not receive at least six months' advance notice of Beauty Bungalows' intent not to renew the franchise. Furthermore, Beauty Bungalows cannot refuse to renew a franchise on terms generally available to other franchisees of the same class or type under similar circumstances.