What happens to all rights of the franchisee under the Exit Franchise Agreement upon termination?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
chisor and for EXIT, as liquidated damages and not as a penalty, an amount equal to the average monthly Continuing Fees paid to Subfranchisor and EXIT in accordance with the EXIT Formula for the twelve (12) month period immediately preceding the termination multiplied by the number of months remaining until the Expiration Date.
17. POST TERMINATION - RIGHTS AND OBLIGATIONS
17.1. Obligations upon Termination or Non-renewal
If this Agreement is terminated or not renewed:
(A) All provisions in this Agreement concerning obligations of Franchisee to EXIT, Subfranchisor and the Broker's Council shall be deemed to survive the termination of this Agreement.
(B) All rights of Franchisee under this Agreement shall terminate and Franchisee shall immediately discontinue all use, imitation or duplication of all distinguishing characteristics of the System, including but not limited to, trade names, trademarks, service marks, membership marks, certification marks, copyrights, designs, slogans, logos, names, advertising copy or other printed or physical materials now or hereafter displayed, used or becoming a part of the System.
(C) Franchisee shall immediately cease and refrain from using the System, or any parts thereof, and Franchisee shall immediately cease and refrain from holding itself out to the public in any way as a member of or as a former member of the System or as a Franchisee, Affiliate or operator of the System.
(D) Franchisee shall immediately distinguish its operations from that of EXIT, Subfranchisor, and of EXIT Affiliates so as to avoid every possibility of any confusion to the public.
(E) Franchisee, at its expense, shall make or cause to be made such changes in signs, telephone numbers, buildings or structures as EXIT or Subfranchisor may direct in order to distinguish Franchisee effectively from its former appearance and from other EXIT Affiliates. The changes shall include a complete change in the trade name from that under which Franchisee conducted its business while affiliated with the System. If Franchisee shall, upon request, fail or omit to make or cause to be made the changes within ten (10) days, then Subfranchisor shall have the right to enter upon the premises, without liability, and make, or cause to be made, the changes at the expense of Franchisee, which expenses shall be paid by Franchisee upon demand.
(F) Franchisee shall, at Subfranchisor's direction, file the appropriate forms to abandon and/or withdraw any assumed name certificate, to cease all activities with and claims to ownership of any trade or assumed name containing any Proprietary mark or to transfer the same to Subfranchisor, and/or to change the name of its corporation, partnership, or affiliate to eliminate any reference to the System.
(G) Franchisee shall immediately return to Subfranchisor all manuals, bulletins, instruction sheets, forms, marks, designs, signs, printed matter, and other material obtained by Franchisee under and pursuant to this Agreement, together with copies of the same that may have been made by Franchisee, or that are in its possession, custody or control.
(H) Franchisee shall immediately cause the local telephone company to change all of its telephone numbers and assign the numbers listed for the franchised real estate office to Subfranchisor.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, upon termination or non-renewal of the Franchise Agreement, all rights of the franchisee are terminated. The franchisee must immediately stop using any distinguishing characteristics of the Exit system, including trade names, trademarks, service marks, copyrights, designs, slogans, logos, names, advertising copy, or other printed or physical materials. This means the franchisee can no longer operate under the Exit brand or use any of its associated intellectual property.
In addition to ceasing use of the Exit system, the franchisee must also take several other actions. They must change all local telephone numbers and assign the numbers listed for the franchised real estate office to the Subfranchisor, unless the franchisee has met all financial obligations and is not in default at the time of expiration. The franchisee must also assign all Exit-related domain names, internet websites, web pages, and e-mail addresses to the Subfranchisor or its designee. Furthermore, for three years following termination or non-renewal, the franchisee must keep the Subfranchisor informed of their current business and residence address and telephone numbers, as well as the business address and phone number of their employer, if any.
Exit affiliates are allowed to solicit the franchisee's sales representatives for transfer to other operating Exit offices, both during the ten-day period prior to termination or non-renewal and after the termination becomes effective. The franchisee is required to assist in these transfers and facilitate the assignment of the sales representatives' listings and pending transactions to the Exit affiliate acting as the sales representative's new broker. Finally, the franchisee must refrain from using the term "Exit" or any confusingly similar term in any subsequent business, to avoid creating confusion about their affiliation with the Exit system.
Moreover, the franchisee is obligated to close all transactions under contract at the time of termination through Exit's proprietary system "MEMO" and pay all company development fees, transaction fees, and regional development fees that are due. These post-termination obligations highlight the importance of understanding the terms of the Franchise Agreement and the steps required upon its termination or non-renewal. Franchisees should be aware of these requirements to ensure a smooth transition and avoid potential legal issues.