Will Management Recruiters charge an initial or renewal franchise fee for a Successive Agreement?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
is in full compliance with this Agreement when the Initial Term expires, and contingent upon the Franchisee's execution of general releases, in a form satisfactory to Franchisor, of all claims against Franchisor, its Affiliates, and each of their respective officers, directors, employees, agents, attorneys, and insurers Franchisee shall have the option to enter into a successive agreement (the "Successive Agreement"). The terms and conditions of the Successive Agreement, including, without limitation, the levels of Continuing Fees and other fees payable by Franchisee, shall be the same as the terms set forth in Franchisor's then-standard form of franchise agreement for a new franchise of the type granted hereunder, except that, under the Successive Agreement(s), no initial or renewal franchise fee shall be charged to the Franchisee, and the formulas calculating the levels of Continuing Fees and other fees payable by Franchisee (exclusive of fees based on workers' compensation claims, unemployment claims, or other fees imposed by any Governmental Authority or insurer which is passed through by Franchisor to Franchisee) with regard to any calendar year during the term of each such Successive Agreement shall not exceed one hundred twenty-five percent (125%) of the formulas calculating the Continuing Fees which were in effect for the immediately preceding term adjusted by the annual increase in the CPI.
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, franchisees will not be charged an initial or renewal franchise fee for a Successive Agreement. A Successive Agreement is a renewal agreement that occurs after the initial term expires, provided the franchisee has complied with the existing agreement.
The terms and conditions of the Successive Agreement, including continuing fees, will be the same as those in Management Recruiters' then-current standard franchise agreement for new franchises. However, the formulas calculating continuing fees (excluding those based on workers' compensation, unemployment claims, or other governmental/insurer fees) cannot exceed 125% of the formulas in effect for the immediately preceding term, adjusted by the annual increase in the CPI.
Management Recruiters retains the right to charge franchisees for services rendered or expenses incurred in connection with the Successive Agreement. The term of each Successive Agreement will be at least five years, as agreed upon by both parties. This provides an incentive for existing franchisees to renew their agreements, as they avoid the upfront costs typically associated with new franchises while still being subject to potential increases in continuing fees.