What fees must a Devon Creek franchisee pay to obtain a Successor Agreement?
Devon_Creek Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee shall
be charged a successor agreement fee of 10% of the then current initial franchise fee herein referred to as the ("Successor Agreement Fee").
- 5.1 Form and Manner of Successor Agreement. If Franchisee desires to exercise Franchisee's option to enter into a Successor Franchise Agreement, it shall be done in the following manner:
- 5.1.1 Not less than nine (9) months prior to the expiration of the Term of this Agreement, Franchisee shall request from Franchisor in writing, a copy of Franchisor's then current Disclosure Document (including Franchisor's then current franchise agreement).
- 5.1.2 Franchisee must execute and return to Franchisor all required documents, including any and all ancillary documents, within sixty (60) days after receipt by Franchisee of a copy of Franchisor's then current Disclosure Document.
- 5.1.3 The Successor Franchise Agreement shall supersede this Agreement in all respects, and Franchisee understands and acknowledges that the terms of such new agreement may differ from the terms of this Agreement, including, without limitation, higher or lower royalty and other fees.
- 5.1.4 If Franchisee fails to perform any of the acts, or deliver any of the notices required pursuant to this Section 5.1 in a timely fashion, such failure shall be deemed an election by Franchisee not to exercise Franchisee's option to enter into the Successor Franchise Agreement, and such failure shall cause Franchisee's right and option to automatically lapse and expire, without further notice by Franchisor.
- 5.1.5 Franchisee acknowledges that the initial Term of this Agreement provides Franchisee more than a sufficient opportunity to recoup Franchisee's investment in the Franchise, as well as a reasonable return on such investment.
Source: Item 22 — CONTRACTS (FDD page 45)
What This Means (2024 FDD)
According to Devon Creek's 2024 Franchise Disclosure Document, a franchisee must pay a Successor Agreement Fee to obtain a Successor Agreement. This fee is equal to 10% of the then-current initial franchise fee.
To exercise the option to enter into a Successor Franchise Agreement, the franchisee must request a copy of Devon Creek's current Disclosure Document at least nine months before the expiration of the current agreement's term. The franchisee must then execute and return all required documents, including any ancillary documents, within 60 days of receiving the Disclosure Document.
It is important to note that the terms of the Successor Franchise Agreement may differ from the original agreement, potentially including higher or lower royalty and other fees. Failure to meet the specified deadlines or requirements will result in the franchisee's option to renew automatically lapsing.