In Michigan, does the law require Bombs Away to offer the same renewal terms to all franchisees of the same class?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 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.
- (e) A provision that permits the franchisor to refuse to renew a franchise on terms generally available to other franchisees of the same class or type under similar circumstances.
This section does not require a renewal provision.
Source: Item 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, Michigan law addresses franchise renewal terms. Specifically, Michigan prohibits franchise provisions that allow Bombs Away to refuse renewal without fairly compensating the franchisee for the fair market value of inventory, supplies, equipment, fixtures, and furnishings at the time of expiration. This protection applies only if the franchise term is less than 5 years, and the franchisee is either prohibited from operating a similar business under a different brand in the same area after the franchise expires, or the franchisee does not receive at least 6 months' advance notice of Bombs Away's intent not to renew.
However, the FDD also states that Michigan law voids any provision that permits Bombs Away to refuse to renew a franchise on terms generally available to other franchisees of the same class or type under similar circumstances. This means Bombs Away cannot discriminate against a franchisee during renewal if other franchisees of the same type are receiving more favorable terms.
This section does not require a renewal provision. Therefore, Bombs Away is not obligated to offer a renewal at all, but if they do offer renewals to some franchisees, they must offer similar terms to all franchisees in the same class or type under similar circumstances. This ensures fairness and prevents Bombs Away from unfairly disadvantaging specific franchisees during the renewal process.