What is the 'New Franchise Agreement' referring to in the Extreme Art Studio agreement?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
- (f) the transferee shall (if the transfer is of this Franchise Agreement), or you shall (if the transfer is of a controlling ownership interest in you or one of your owners), sign our then-current form of franchise agreement and related documents, (including, but not limited to, our then-current form of Owners Agreement) any and all of the provisions of which may differ materially from any and all of those contained in this Franchise Agreement, including the Royalty and the Marketing Fees; provided, however, that the term of the new franchise agreement signed will equal the remainder of the then-remaining term of this Franchise Agreement;
Source: Item 22 — CONTRACTS (FDD page 49)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, the 'new franchise agreement' refers to the agreement a transferee must sign if the franchisee transfers their current franchise agreement to a new owner. This new agreement ensures the incoming franchisee is bound by the then-current terms and conditions, which may differ significantly from the original agreement.
Specifically, if a franchisee wishes to transfer their Extreme Art Studio franchise, the transferee must sign Extreme Art Studio's current form of franchise agreement. This ensures that the new owner operates under the latest standards and obligations of the Extreme Art Studio system. The terms in the new agreement can include different royalty and marketing fees than the original agreement.
However, the term of the new franchise agreement will only last for the remainder of the original franchise agreement's term. For example, if the original franchise agreement had five years remaining, the new franchise agreement signed by the transferee would also be for five years. This ensures that the franchise term remains consistent despite the change in ownership.