Can a Bor Restoration franchisee with outstanding material defaults renew their franchise?
Bor_Restoration Franchise · 2024 FDDAnswer from 2024 FDD Document
| PROVISION | SECTION IN FRANCHISE AGREEMENT | SUMMARY |
|---|---|---|
| a. Length of the franchise term | 4 | Ten years unless terminated sooner. |
| b. Renewal or extension of the term | 4 | Two additional 5-year terms if all obligations for Successor Franchise Rights are met. |
| c. Requirements for franchisee to renew or extend | 4 | You must provide notice, you must have no outstanding material defaults or money owed, you must not have had more than three default notices during the initial term or one notice during the Successor Franchise Term, we must not have determined in our Reasonable Business Judgment not to renew, you must sign the then-current Franchise Agreement (which may have terms materially different than those of your current Franchise Agreement) and pay the renewal fee. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 33–35)
What This Means (2024 FDD)
According to Bor Restoration's 2024 Franchise Disclosure Document, a franchisee cannot renew their franchise agreement if they have outstanding material defaults at the time of renewal. The FDD outlines specific requirements that a franchisee must meet to be eligible for renewal, including having no outstanding material defaults or money owed to Bor Restoration.
To renew their Bor Restoration franchise, a franchisee must provide notice of their intent to renew and must not have more than three default notices during the initial ten-year term, or more than one notice during the Successor Franchise Term, which are the two additional five-year terms offered for renewal. Bor Restoration must also not have determined, using their Reasonable Business Judgment, not to renew the franchise agreement. Furthermore, the franchisee must sign the then-current Franchise Agreement, which may contain terms that are significantly different from the original agreement, and pay the renewal fee.
This condition is fairly standard in franchising, as franchisors typically want to ensure that franchisees are in good standing before allowing them to continue operating under the brand. Franchisees should, therefore, maintain compliance with the franchise agreement and address any defaults promptly to ensure eligibility for renewal. Prospective franchisees should carefully review the renewal terms in the Franchise Agreement and discuss any concerns with Bor Restoration before signing the agreement.