What is the duration of the renewal term that Ella Cafe can impose on a franchisee who holds over?
Ella_Cafe Franchise · 2024 FDDAnswer from 2024 FDD Document
Subject to the conditions below, Franchisee has the right to obtain a successor franchise at the expiration of the Term of this Agreement by entering into Franchisor's then-current franchise agreement with Franchisor. Franchisee's right to a successor franchise is
limited to two additional terms of five (5) years. Your failure to exercise the first renewal right, will serve as a waiver of all other renewal rights. To qualify for a successor franchise, each of the following pre-conditions shall have been fulfilled and remain true as of the last day of the Term of this Agreement:
- i.
Franchisee has, during the entire term of this Agreement, substantially complied with all provisions of this Agreement;
- ii.
Franchisee has updated, remodeled, and refurbished the Coffee House, signage, and equipment, to reflect Franchisor's then-current standards and specifications applicable to new franchisees;
- iii.
Source: Item 22 — CONTRACTS (FDD page 50)
What This Means (2024 FDD)
Based on the 2024 Ella Cafe Franchise Disclosure Document, a franchisee has the right to obtain a successor franchise at the expiration of the original term by entering into Ella Cafe's then-current franchise agreement. The franchisee's right to a successor franchise is limited to two additional terms of five years each. However, if the franchisee fails to exercise the first renewal right, they waive all other renewal rights.
To qualify for a successor franchise with Ella Cafe, the franchisee must meet several preconditions. These include substantially complying with all provisions of the existing agreement during its entire term, updating, remodeling, and refurbishing the Coffee House to reflect Ella Cafe's current standards for new franchisees. The franchisee must also satisfy all monetary obligations to Ella Cafe, avoid being in default of any agreement, and provide evidence of a continued right to the premises.
Additionally, the franchisee must provide written notice of their intent to operate a successor franchise to Ella Cafe not less than 90 days nor more than 180 days before the end of the current term, and pay 50% of the then-current initial franchise fee, called the "Renewal Fee", under the then-current franchise agreement. Finally, the franchisee must execute Ella Cafe's then-current form of franchise agreement, which may have materially different terms, including a different percentage Royalty Fee, and comply with any training requirements. The franchisee must also execute a general release of claims against Ella Cafe.