Are there any fees associated with renewing the Extreme Art Studio franchise term?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Franchise Agreement and Multi-Franchise Addendum | Summary |
|---|---|---|
| (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, franchisees must pay a successor franchise fee to renew their franchise agreement for an additional term of ten years. The exact amount of this fee is not specified in Item 17, but the FDD states that the renewal fees will not be greater than the fees that Extreme Art Studio then imposes on similarly situated renewing franchisees.
In addition to paying the successor franchise fee, franchisees must meet other requirements to be eligible for renewal. These requirements include providing written notice of their intent to renew, demonstrating full compliance with the existing franchise agreement, signing the then-current form of franchise agreement and a release, maintaining possession of the studio location, and completing any required refurbishing of the studio.
It is important to note that the terms and conditions of the renewed franchise agreement may differ materially from the original agreement. This could include changes to royalty fees, advertising contributions, and the boundaries of the franchisee's territory. Prospective franchisees should carefully review the then-current franchise agreement before deciding to renew their franchise to understand the potential financial and operational implications.
While the FDD specifies that a successor franchise fee is required for renewal, it does not provide the exact amount. A prospective franchisee should inquire with Extreme Art Studio about the current successor franchise fee and any other specific costs associated with the renewal process to make an informed decision.