How long is the initial term of the Exit Agreement, assuming it is not terminated early?
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 Exit's 2025 Franchise Disclosure Document, the initial term of the Exit Agreement is five years, commencing on the Compliance Date and expiring five years after that date, unless terminated earlier as per the agreement's provisions. This means a franchisee can expect to operate under the initial agreement for a fixed period of five years, provided they adhere to the terms and conditions outlined in the franchise agreement.
After the initial five-year term, the Exit franchisee has the option to renew the agreement for either a five-year or a ten-year term. However, this renewal is contingent upon meeting several conditions. The franchisee must have complied with all material terms and conditions of the agreement, including Exit's operating and performance standards. They must also provide written notice of their intent to renew at least six months before the end of the current term.
To finalize the renewal, the Exit franchisee must execute the then-current standard franchise agreement for new franchisees, pay a renewal fee, and attend required training programs. The renewal fee is structured as a percentage of the then-current initial franchise fee, with 10% for a five-year renewal and 15% for a ten-year renewal, subject to certain caps based on the initial fee paid. Meeting all these conditions ensures the franchisee can continue operating under the Exit brand for an additional term.
It is important for prospective Exit franchisees to understand these renewal terms and conditions, as they impact the long-term viability and costs associated with the franchise. Failing to meet any of the conditions, such as timely payments or adherence to operating standards, could jeopardize the opportunity to renew the agreement and continue operating the franchise beyond the initial five-year term.