What monetary obligations must an Exit franchisee satisfy to be eligible for renewal?
Exit Franchise · 2025 FDDAnswer from 2025 FDD Document
nt 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;
Source: Item 23 — RECEIPT (FDD pages 42–235)
What This Means (2025 FDD)
According to Exit's 2025 Franchise Disclosure Document, a franchisee must meet specific monetary obligations to be eligible for renewal. The franchisee must have timely paid or satisfied all monetary obligations owed to both Exit and the Subfranchisor before the current agreement's term ends, and must have maintained timely payments throughout the agreement's term.
In addition to fulfilling all outstanding payment obligations, the Exit franchisee must also pay a renewal fee. For a five-year renewal term, the fee is 10% of the then-current initial franchise fee for the franchisee's territory size, but it will not exceed 25% of the initial franchise fee originally paid. For a ten-year renewal term, the fee increases to 15% of the then-current initial fee, capped at 37.5% of the initial fee paid. This renewal fee must be paid on or before the first day of the renewal term.
These financial requirements are standard in franchising, as franchisors need to ensure franchisees are in good financial standing and are committed to the brand. The renewal fee compensates Exit for extending the franchise agreement and allowing the franchisee to continue operating under the Exit brand. Prospective franchisees should carefully consider these costs and ensure they can meet these financial obligations to secure their franchise's future.