What are the conditions under which Extreme Art Studio may decide NOT to grant a successor franchise?

commences, in full compliance with this Franchise Agreement and all System Standards, you acknowledge that we need not grant you a successor franchise, whether or not we had, or chose to exercise, the right to terminate this Franchise Agreement during its term under Section 14.2.

13.2 GRANT OF A SUCCESSOR FRANCHISE.

• 13.2.1 You agree to give us written notice ("Your Notice") of your election to acquire a successor franchise no more than 12 months and no less than six months before this Franchise Agreement expires. We agree to give you written notice ("Our Notice") not more than three months after we receive your notice, of our decision:
  • (a) to grant you a successor franchise;
  • (b) to grant you a successor franchise on the condition that you correct existing deficiencies of the Franchised Business or in your operation of the Franchised Business;
  • (c) not to grant you a successor franchise based on our determination that you and your owners have not substantially complied with this Franchise Agreement during its term or were not in full compliance with this Franchise Agreement and all System Standards on the date you gave us written notice of your election to acquire a successor franchise; or
  • (d) not to grant you a successor franchise if we are no longer offering franchises for Extreme Art Studio Businesses.

13.2.2 If applicable, Our Notice will:

• (a) describe the improvements, technology upgrades, trade dress updates, and/or modifications required to bring the Operating Assets of the Franchised Business into compliance with then-applicable System Standards for new Extreme Art Studio Businesses; and
• (b) state the actions you must take to correct operating deficiencies and the time period in which you must correct these deficiencies.
• 13.2.3 If we elect not to grant you a successor franchise, Our Notice will describe the reasons for our decision.

Source: Item 22 — CONTRACTS (FDD page 49)