In Michigan, what assets must City Publications compensate a franchisee for if they refuse to renew the franchise?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
- ◼ 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: (a) the term of the franchise is less than 5 years, and (b) 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.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to the 2025 City Publications Franchise Disclosure Document, Michigan franchisees are entitled to compensation if City Publications refuses to renew their franchise under specific conditions. If the franchise term is less than five years, and the franchisee is either prohibited from operating a similar business in the same area after the franchise expires, or does not receive at least six months' advance notice of non-renewal, City Publications must fairly compensate the franchisee. This compensation covers the fair market value of the franchisee's inventory, supplies, equipment, fixtures, and furnishings at the time of expiration.
However, there are exceptions to this compensation requirement. City Publications is not obligated to compensate for personalized materials that have no value to them. Additionally, inventory, supplies, equipment, fixtures, and furnishings that are not reasonably required for conducting the franchise business are also excluded from compensation.
This provision aims to protect franchisees from unfair non-renewal practices by ensuring they are not left with unusable assets if their franchise is not renewed under certain circumstances. Prospective franchisees in Michigan should carefully consider these conditions and understand their rights regarding compensation for assets in the event of non-renewal.