Does Michigan law require Bombs Away to include a renewal provision in its franchise agreement?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
ttling any and all claims.
- (c) A provision that permits a franchisor to terminate a franchise prior to the expiration of its term except for good cause. Good cause shall include the failure of the franchisee to comply with any lawful provision of the franchise agreement and to cure such failure after being given written notice thereof and a reasonable opportunity, which in no event need be more than 30 days, to cure such failure.
- (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.
Source: Item 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to the 2024 Bombs Away Franchise Disclosure Document, Michigan law does not require Bombs Away to include a renewal provision in its franchise agreement. However, Michigan law prohibits Bombs Away from refusing to renew a franchise without fairly compensating the franchisee for the fair market value of their inventory, supplies, equipment, fixtures, and furnishings at the time of expiration. This protection applies to personalized materials that have no value to Bombs Away, and inventory, supplies, equipment, fixtures, and furnishings not reasonably required in the conduct of the franchise business are not subject to compensation.
This protection for Bombs Away franchisees in Michigan only applies if (i) the franchise term is less than 5 years and (ii) the franchisee is prohibited from continuing the same business under a different trademark in the same area after the franchise expires. This protection also applies if the franchisee does not receive at least 6 months' advance notice of Bombs Away's intent not to renew the franchise.
Additionally, Michigan law states that Bombs Away cannot refuse to renew a franchise on terms not generally available to other franchisees of the same class or type under similar circumstances. This ensures that Bombs Away franchisees are treated equitably compared to their peers within the franchise system. Bombs Away is also prohibited from including certain unfair provisions in its franchise agreements, such as preventing a franchisee from joining a franchisee association or forcing a franchisee to conduct arbitration or litigation outside of Michigan.