Does the Extreme Art Studio Multi-Franchise Addendum affect the number of renewals available?
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 Multi-Franchise Addendum does affect the renewal terms. Specifically, the length of the franchise term is detailed in Section 1.4 of the Franchise Agreement and Section 5 of the Multi-Franchise Addendum, establishing a term of 10 years. The FDD states that the Multi-Franchise Addendum terminates upon the termination or expiration of the Franchise Agreement.
Regarding renewals, Section 13.1 indicates that a franchisee is eligible for one additional ten-year term if they meet the specified requirements. These requirements are outlined in Section 13 and include providing written notice, demonstrating full compliance with the existing agreement, signing the then-current franchise agreement, and executing a release.
Furthermore, to renew the Extreme Art Studio franchise, a franchisee must maintain possession of the studio location, complete any required refurbishing, and pay the successor franchise fee. The renewed franchise agreement may contain materially different terms and conditions, such as higher royalty and advertising contributions, compared to the original agreement. The territory boundaries could also change upon renewal, and the renewal fees will not exceed those imposed on similarly situated renewing franchisees.