What is the minimum term length for each Successive Agreement for a Management Recruiters franchise?
Management_Recruiters Franchise · 2024 FDDAnswer from 2024 FDD Document
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.
The Term of each such Successive Agreement shall be a term of at least five (5) years agreed upon by the Parties.
Franchisor shall have the right to charge Franchisee for services that Franchisor renders to Franchisee or expenses that Franchisor incurs in connection with such Successive Agreement.
Source: Item 23 — RECEIPTS (FDD pages 67–327)
What This Means (2024 FDD)
According to Management Recruiters' 2024 Franchise Disclosure Document, the term length for each Successive Agreement is a minimum of five years, with the final term to be agreed upon by both parties. A Successive Agreement is an option for franchisees who have fully complied with the existing agreement and are in full compliance when the initial term expires. This option is contingent upon the franchisee's execution of general releases of all claims against Management Recruiters.
The terms and conditions of the Successive Agreement will align with Management Recruiters' then-standard franchise agreement for new franchises. However, franchisees entering into a Successive Agreement will not be charged an initial or renewal franchise fee. The continuing fees and other fees payable by the franchisee can increase up to a maximum of 125% of the formulas used to calculate the fees in the immediately preceding term, adjusted by the annual increase in the Consumer Price Index (CPI).
Prospective franchisees should note that Management Recruiters has the right to charge for services rendered or expenses incurred in connection with the Successive Agreement. Franchisees must notify Management Recruiters in writing of their desire to enter into a Successive Agreement between 360 and 180 days prior to the expiration of the initial term. Failure to provide this notice within the specified time frame constitutes an election not to enter into a Successive Agreement.