What is the 'Former Franchise Agreement' date referring to in the Extreme Art Studio agreement?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
- 13.1.1 Upon expiration of this Franchise Agreement, if you meet certain conditions, and subject to the terms and conditions of this Section 13, and subject to the terms and conditions of this Franchise Agreement, then you will have the option to acquire a successor franchise to operate the Franchised Business as an Extreme Art Studio Business for an additional term of ten years. If you are signing this franchise agreement as a successor agreement, the references to "term" shall mean the applicable renewal term of the successor agreement. The qualifications and conditions for the successor franchise term are described below.
- 13.1.2 When this Franchise Agreement expires you have the option to acquire a successor franchise commencing immediately upon the expiration of this Franchise Agreement, if:
- (a) you (and each of your owners) have substantially complied with this Franchise Agreement during its term;
- (b) you (and each of your owners) are, both on the date you give us written notice of your election to acquire a successor franchise (as provided in Section 13.2 below) and on the date on which the term of the successor franchise would commence, in full compliance with this Franchise Agreement and all System Standards;
- (c) you add, update, or replace Operating Assets (if necessary) at our request;
- (d) you pay us a successor franchise fee for each successor Extreme Art Studio Business being renewed, in the amount of ten percent (10%) of our then-current Initial Franchise Fee for new franchises (or if we are not offering Franchises at the time of your renewal, the successor franchise fee shall be ten percent (10%) of the initial franchise fee listed in our most recent franchise disclosure document); and
- (e) you: (a) retain the right to use the Studio(s) and agree to renew your lease agreements; or (b) at your option, secure rights to use one or more substitute Studio(s) that
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, the 'Former Franchise Agreement' date refers to a situation where a franchisee is signing a new agreement to replace a previous one. Specifically, if a franchisee is renewing their franchise, any references to the 'term' of the agreement will apply to the renewal term of this successor agreement.
This means that the conditions and qualifications for renewing the franchise are based on the franchisee's compliance with the original Franchise Agreement. To qualify for a successor franchise, the franchisee must have substantially complied with the original agreement's terms during its duration and be in full compliance with all System Standards when they apply for renewal and when the new term starts.
Furthermore, Extreme Art Studio may require updates or replacements to operating assets as a condition of renewal. The franchisee will also need to pay a successor franchise fee, which is 10% of the then-current initial franchise fee for new franchises. If Extreme Art Studio isn't offering new franchises at the time of renewal, the fee will be 10% of the initial franchise fee listed in the most recent franchise disclosure document. The franchisee must also retain or secure an approved studio location and enter into lease agreements that meet System Standards.