When does the initial term of the Exit Agreement commence?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
The term of this Agreement shall commence on the Compliance Date and, unless sooner terminated as provided in this Agreement, shall expire five (5) years after the Compliance Date (the "Expiration Date").
5.2. Renewal Terms
Franchisee shall have the option to renew this Agreement for subsequent five (5) year or ten (10) year terms (each referred to as a "Renewal Term"), provided that Franchisee has complied with the following conditions:
- (A) During the term of this Agreement, Franchisee has complied with all of the material terms and conditions of this Agreement and has complied with EXIT's operating and performance standards and procedures; and
- (B) Franchisee has given Subfranchisor written notice at least six (6) months prior to the end of the term of this Agreement of its intention to renew this Agreement for either five (5) or ten (10) years; and
- (C) Franchisee, on or before the first (1st) day of the Renewal Term, executes the then-current standard Franchise Agreement being offered to new Franchisees by the Subfranchisor for either five (5) or ten (10) year renewal, as requested by Franchisee; and
- (D) All monetary obligations owed by Franchisee to EXIT and Subfranchisor have been timely paid or satisfied prior to the end of the term of this Agreement, and have been timely paid throughout the term of this Agreement; and
- (E) Franchisee shall pay to Subfranchisor, on or before the first (1st) day of the Renewal Term, a Renewal Fee of ten percent (10%) of the then current Initial Franchise Fee for your size franchise territory (not to exceed 25% of the Initial Franchise fee paid) for a five (5) year term renewal or a Renewal Fee of fifteen percent (15%) of the then current Initial Fee for your size franchise territory (not to exceed 37.5% of the Initial Fee paid) for a ten (10) year term renewal; and
- (F) On or before the first (1st) day of the Renewal Term, Franchisee attends the training programs provided by Subfranchisor and EXIT for renewing franchisees.
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to the 2025 Exit Franchise Disclosure Document, the initial term of the Exit Agreement begins on the Compliance Date. Unless terminated earlier as per the agreement's provisions, the agreement will remain in effect for five years from the Compliance Date, concluding on the Expiration Date.
This means that for a prospective Exit franchisee, the start date of their franchise agreement is tied to meeting certain compliance requirements, which are not defined in this excerpt. The franchisee's obligations and the franchisor's expectations must be met by this date. The agreement's duration is fixed at five years from this Compliance Date, providing a defined period for the franchise operation.
Furthermore, the Exit agreement provides the franchisee with the option to renew the agreement for subsequent five-year or ten-year terms, provided certain conditions are met. These conditions include compliance with the terms of the agreement, providing written notice of intent to renew at least six months before the end of the current term, executing the then-current standard franchise agreement, satisfying all monetary obligations, paying a renewal fee, and attending required training programs.