What is the initial length of the franchise term for an Extreme Art Studio franchise?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Franchise Agreement and Multi-Franchise Addendum | Summary |
|---|---|---|
| (a) Length of the franchise term | Section 1.4 of Franchise Agreement and Section 5 of Multi-Franchise Addendum (Exhibit H-7) | 10 years. The Multi-Franchise Addendum terminates upon termination or expiration of the Franchise Agreement. |
| (b) Renewal or extension of the term | Section 13.1 | One additional ten-year term, if you meet the requirements. |
| (c) Requirements for franchisee to renew or extend | Section 13 | The term "renewal" refers to extending our franchise relationship at the end of your initial term and any other renewal or extension of the initial term. Your successor franchise rights permit you to remain as a Franchise after the initial term of your Franchise Agreement expires. You must provide written notice; full compliance; sign then-current form of franchise agreement; sign release; maintain possession of Studio location; complete refurbishing; pay successor franchise fee; and others. You must sign our then-current Franchise Agreement and ancillary documents for the successor term, and this new franchise agreement may have materially different terms and conditions (including, e.g., higher Royalty and advertising contributions) from the Franchise Agreement that covered your original term. The boundaries of your Territory may change, and the fees on renewal will not be greater than the fees that we then impose on similarly situated renewing franchisees. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 43–46)
What This Means (2024 FDD)
According to Extreme Art Studio's 2024 Franchise Disclosure Document, the initial franchise term is 10 years. This means that a new franchisee will be granted the right to operate an Extreme Art Studio business for a decade, as detailed in Section 1.4 of the Franchise Agreement and Section 5 of the Multi-Franchise Addendum. The Multi-Franchise Addendum terminates upon the termination or expiration of the Franchise Agreement.
At the end of the initial 10-year term, franchisees have the option to renew their agreement for one additional ten-year term, as outlined in Section 13.1 of the Franchise Agreement. However, this renewal is contingent upon meeting certain requirements set forth by Extreme Art Studio.
To renew the franchise agreement, Section 13 specifies that franchisees must provide written notice, demonstrate full compliance with the existing agreement, sign the then-current form of the franchise agreement, and sign a release. Additionally, franchisees must maintain possession of the studio location, complete any required refurbishing, and pay a successor franchise fee. It is important to note that the terms and conditions of the renewed franchise agreement may differ materially from the original agreement, potentially including higher royalty and advertising contributions. The territory boundaries may also change upon renewal, and the renewal fees will not exceed those imposed on similarly situated renewing franchisees.