For a Big O Tires franchise, what conditions must be met to exercise the renewal option for the lease?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
- 1.3. Renewal Option. Provided that at the time of the giving of Tenant's renewal notice and at the end of the term hereof Tenant is not in default of any of the terms, conditions or covenants contained herein and provided, further, that the Franchise Agreement (as defined in Section 4) has been renewed by Tenant and Big O Tires, LLC, a Nevada limited liability company ("Big O"), Tenant (including any approved assignee or subtenant) is hereby granted the option to extend this Lease for two (2) successive additional terms of five (5) years each (the "Extended Terms") upon Tenant's notifying Landlord in writing of its election to extend at least one hundred eighty (180) days prior to expiration of this Lease. During such Extended Terms, if exercised, this Lease shall be on the same terms and conditions contained herein except: (a) the Extended Terms shall contain no further extension options unless expressly granted by Landlord in writing; and (b) Tenant agrees to pay to Landlord during said
Source: Item 23 — RECEIPTS (FDD pages 102–535)
What This Means (2025 FDD)
According to Big O Tires's 2025 Franchise Disclosure Document, a franchisee has the option to extend their lease for two additional terms of five years each, provided certain conditions are met. To exercise this renewal option, the franchisee must not be in default of any terms, conditions, or covenants of the lease at the time of giving the renewal notice and at the end of the current lease term. Additionally, the franchisee must have renewed their Franchise Agreement with Big O Tires.
To extend the lease, the franchisee must notify the landlord in writing of their election to extend the lease at least 180 days prior to the expiration of the current lease. If the renewal option is exercised, the lease during the extended terms will be on the same terms and conditions as the original lease, with a couple of exceptions. First, the extended terms will not include any further extension options unless expressly granted by the landlord in writing. Second, the franchisee must agree to pay the landlord an adjusted annual base rent during the extended term, which will be set and subject to adjustment according to the lease agreement.
This clause ensures that Big O Tires franchisees who maintain good standing and renew their franchise agreement have the opportunity to continue operating at their location for additional terms, providing stability and continuity for their business. However, it also highlights the importance of staying in compliance with the lease terms and renewing the franchise agreement in a timely manner to avoid losing the option to extend the lease. The 180-day notice requirement is also a critical deadline for franchisees to keep in mind.