What is the initial term length of the Big O Tires Agreement?
Big_O_Tires Franchise · 2025 FDDAnswer from 2025 FDD Document
1. Term, Commencement of First Year and Renewal Option.
- 1.1. Term. The initial term of this Lease shall be for ten (10) years (the "Term") commencing on the "Commencement Date," as defined in Subsection 1.4 below, and ending ten (10) years from the Commencement Date, subject to such options to extend as defined in Subsection 1.3 below.
- 1.2. Commencement of First Year. For the purposes of this Section 1, the first "Lease Year" shall commence on the first day of the calendar month on or after which the term of this Lease commences and shall run for twelve (12) full calendar months thereafter, and each succeeding twelve (12) month period thereafter shall be deemed a Lease Year. The period between the Commencement Date, if other than the first day of a month, and the first day of the next calendar month shall be included as part of the first month of the first Lease Year and Tenant shall pay the pro-rata portion of rent for that additional period on the Commencement Date.
- 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 the 2025 Big O Tires Franchise Disclosure Document, the initial term of the lease agreement is ten years. The term commences on the date defined in subsection 1.4 and ends ten years from that commencement date.
This means a franchisee can expect to operate their Big O Tires location under the initial lease terms for a decade, provided they adhere to the conditions of the lease. This provides a substantial period for establishing the business and recouping the initial investment.
The lease agreement also includes a renewal option, allowing the tenant to extend the lease for two additional terms of five years each, provided certain conditions are met. These conditions include the tenant not being in default of any terms or covenants at the time of renewal and the franchise agreement being renewed with Big O Tires. This offers the potential for a long-term commitment to the location, further securing the franchisee's investment and business operations.