If a Beehive Homes franchisee elects not to renew, how does the agreement continue?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
5.4. Non-Renewal. If Franchisee makes an Election Not to Renew as provided in 5.2 above, this Agreement shall not expire but shall continue in full force and effect on a month-tomonth basis until terminated by Franchisor by delivery to Franchisee of a written notice of termination at least thirty (30) days prior to the date of such termination.
14.6. Franchisor's Alternative Right Upon Event of Default or Expiration. As additional consideration for this Agreement, Franchisee hereby covenants and agrees to pay to Franchisor and its designees, exercisable upon the occurrence of an Event of Default described in Section 14.1 above, and subject to the notice requirements of Section 14.2 above, or upon the occurrence of an Election Not to Renew as defined in Section 5.2 of this Agreement, or upon expiration of this Agreement, in addition to all other costs and expenses provided for in this Agreement and in lieu of Section 14.5 above, an additional transfer fee in an amount equal to ten (10) times [5% times [12 times [the greater of (i) the average published monthly rate per resident of the Home during the 12 months preceding the Event of Default, times the number of beds in the Home, or (ii) the average published monthly rate per resident of the home which has been in operation for the preceding 18 months and is in nearest geographic proximity to the Home, times the number of beds in the Home]]]. The parties hereto agree that this additional transfer fee is not a penalty, but the parties' best estimate of the anticipated damage to Franchisor resulting from the Event of Default or Election Not to Renew or expiration.
14.7. Franchisee's Obligation to Sell. Notwithstanding any other provision of this Agreement, upon the occurrence of an Event of Default described in Section 14.1 above, and subject to the notice requirements of Section 14.2 above, or upon the occurrence of an Election Not to Renew as defined in Section 5.2 of this Agreement, or upon expiration of this Agreement, Franchisee will sell, subject to the terms of this Agreement, the Home and its contents within four months after the date of Franchisor's written notice to sell.
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, if a franchisee elects not to renew their franchise agreement, the agreement does not expire immediately. Instead, it continues on a month-to-month basis. This arrangement remains in effect until Beehive Homes, as the franchisor, terminates the agreement by providing the franchisee with a written notice of termination at least thirty days prior to the termination date.
This continuation provides a transition period, allowing the franchisee to continue operating the Beehive Homes location while either preparing to exit the business or potentially negotiating new terms with the franchisor. However, it's important to note that Beehive Homes retains the right to terminate the agreement with only 30 days' notice, creating a degree of uncertainty for the franchisee during this period. The franchisee is still bound by the terms of the original agreement during this month-to-month extension.
Additionally, upon an Election Not to Renew, the franchisee is obligated to pay Beehive Homes an additional transfer fee. This fee is calculated as ten times [5% times [12 times [the greater of (i) the average published monthly rate per resident of the Home during the 12 months preceding the Event of Default, times the number of beds in the Home, or (ii) the average published monthly rate per resident of the home which has been in operation for the preceding 18 months and is in nearest geographic proximity to the Home, times the number of beds in the Home]]]. The franchisee is also obligated to sell the Home and its contents within four months after the date of Beehive Homes' written notice to sell.
Prospective franchisees should carefully consider these conditions, particularly the potential for termination with short notice and the financial implications of non-renewal, including the additional transfer fee and the obligation to sell the Home. Understanding these terms is crucial for making an informed decision about investing in a Beehive Homes franchise.