In Michigan, what items is Beehive Homes NOT required to compensate a franchisee for upon non-renewal?
Beehive_Homes Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee's inventory, supplies, equipment, fixtures, and furnishings.
Personalized materials which have no value to the franchisor 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 5 years; and (ii) the franchisee is prohibited by the franchise or other agreement from 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 the franchisee does not receive at least 6 months advance notice of franchisor's intent not to renew the franchise.
Source: Item 23 — RECEIPTS (FDD pages 34–123)
What This Means (2025 FDD)
According to Beehive Homes' 2025 Franchise Disclosure Document, certain provisions are in place regarding non-renewal compensation for franchisees in Michigan. Specifically, Beehive Homes is not required to compensate a franchisee for personalized materials that have no value to the franchisor. Additionally, compensation is not required for inventory, supplies, equipment, fixtures, and furnishings that are not reasonably required in the conduct of the franchise business.
This provision regarding non-renewal compensation applies only if two conditions are met. First, the term of the franchise must be less than 5 years. Second, the franchisee must be prohibited by the franchise agreement from continuing to conduct substantially the same business under another trademark in the same area after the franchise expires. Alternatively, this provision applies if the franchisee does not receive at least 6 months' advance notice of Beehive Homes' intent not to renew the franchise.
This information is important for prospective franchisees in Michigan as it clarifies the circumstances under which they may or may not be entitled to compensation for certain assets upon non-renewal of their franchise agreement. Franchisees should carefully consider these conditions and understand their rights and obligations regarding non-renewal compensation.