Under what conditions can an Extreme Art Studio franchisee renew or extend the 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 have the option to renew their franchise agreement for one additional ten-year term, provided they meet certain requirements outlined in Section 13.1 of the franchise agreement. This "renewal" essentially extends the franchise relationship beyond the initial term.
To successfully renew, Extreme Art Studio franchisees must provide written notice of their intent to renew. They must also demonstrate full compliance with the existing franchise agreement. A significant condition is the requirement to sign the then-current form of the franchise agreement, which may contain materially different terms and conditions, including potentially higher royalty and advertising contributions. Franchisees must also sign a release, maintain possession of the studio location, and complete any required refurbishing of the studio.
Additionally, franchisees must pay a successor franchise fee to Extreme Art Studio. It is important to note that the boundaries of the franchisee's territory may also change upon renewal. While the renewal fees will not be greater than those imposed on similarly situated renewing franchisees, the potential for altered terms in the new franchise agreement means franchisees need to carefully review the new agreement to understand the financial and operational implications of renewing their Extreme Art Studio franchise.