What is the maximum frequency that Lees Famous Recipe can require remodeling after the initial agreement date?
Lees_Famous_Recipe Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition to your obligations above, you will, at your expense, make such reasonable capital expenditures necessary to remodel, modernize and redecorate the Restaurant premises so that the Restaurant reflects the then-current physical appearance of new Lee's Famous Recipe Restaurants. We may require you to take such action: (1) as soon as five (5) years after the date of this Agreement, but no more than once per each term (and renewal term, if applicable); (2) as a condition to the transfer of any interest as further described in Section 14(C); (3) as a condition of renewal; and (4) otherwise during the term of the Agreement as further described in the Operations Manual. You acknowledge and agree that the requirements of this Section 9(A) are both reasonable and necessary to ensure continued public acceptance and patronage of Lee's Famous Recipe Restaurants and to avoid deterioration or obsolescence in connection with the operation of the Restaurant. You further agree that, prior to any commencement of such repair or remodeling, you will submit to us proposed plans prepared by a licensed architect, at your expense, that comply with applicable laws, ordinances, building codes, permit requirements, lease requirements and restrictions, including proof of any variances required by building and zoning codes. You will not undertake such repairs or remodeling until we have approved the proposed plans in writing as satisfactory.
Source: Item 22 — CONTRACTS (FDD pages 69–70)
What This Means (2025 FDD)
According to the 2025 Lees Famous Recipe FDD, franchisees may be required to remodel their restaurant premises to reflect the current physical appearance of new Lees Famous Recipe restaurants. Lees Famous Recipe can require this remodeling as soon as five years after the franchise agreement date. However, the remodeling cannot be required more than once per each term, including any renewal term if applicable.
This means that a franchisee could potentially face a remodeling requirement relatively early in their initial 15-year term. The franchisee is responsible for all expenses associated with the remodeling, including architectural plans prepared by a licensed architect. These plans must comply with all applicable laws and codes and require approval from Lees Famous Recipe before any work begins.
In addition to the periodic remodeling, Lees Famous Recipe can also require remodeling as a condition of transfer of any interest in the franchise, or as a condition of renewal of the franchise agreement. The FDD also states that remodeling may be required at other times during the agreement term as described in the Operations Manual. This gives Lees Famous Recipe considerable latitude to mandate remodeling to maintain brand standards and public appeal.
Prospective franchisees should carefully consider the potential costs and frequency of required remodels, as these can represent significant capital expenditures. It would be prudent to discuss the typical scope and cost of past remodels with existing franchisees during the due diligence process. Additionally, prospective franchisees should inquire about the specific criteria and standards outlined in the Operations Manual regarding remodeling requirements to fully understand their obligations.