Does the Extreme Art Studio Franchise Agreement require a renewal provision?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
- (e) A provision that permits us to refuse to renew a Franchise on terms generally available to other franchisees of the same class or type under similar circumstances.
This section does not require a renewal provision.
- (f) A provision requiring that arbitration or litigation be conducted outside the State of Michigan.
This shall not preclude you from entering into an agreement, at the time of arbitration, to conduct arbitration at a location outside this state.
Source: Item 23 — RECEIPTS (FDD pages 49–214)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, the franchise agreement itself does not mandate a renewal provision. However, this is subject to certain state laws, particularly in Minnesota.
Specifically, the FDD states that Michigan law does not require a renewal provision. However, if Extreme Art Studio does not renew the franchise, and the initial term was less than five years, the franchisee must be compensated for the fair market value of inventory, supplies, equipment, fixtures, and furnishings. This compensation is not required for personalized materials or items not reasonably required for the franchise business. Additionally, this compensation requirement applies only if the franchisee is prohibited from operating a similar business in the same area after the franchise expires, or if the franchisee does not receive at least six months' advance notice of non-renewal.
In Minnesota, Extreme Art Studio must comply with Minnesota Statute Section 80C.14, Subds. 3, 4, and 5, which generally require 180 days' notice for non-renewal of the Franchise Agreement. Therefore, while the standard Extreme Art Studio agreement may not include a renewal provision, franchisees should be aware of state-specific regulations that may affect their renewal rights or compensation upon non-renewal.