In Michigan, does the FDD require Mrcool to include a renewal provision in its franchise agreement?
Mrcool Franchise · 2025 FDDAnswer from 2025 FDD Document
Michigan FDD Amendment
Amendments to the MRCOOL Franchise Disclosure Document
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE SOMETIMES IN FRANCHISE DOCUMENTS.
IF ANY OF THE FOLLOWING PROVISIONS ARE IN THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED AGAINST YOU.
- A.
A prohibition of your right to join an association of Franchisees.
- B.
A requirement that you assent to a release, assignment, novation, waiver or estoppel that deprives you of rights and protections provided in this act.
This shall not preclude you, after entering into a Franchise Agreement, from settling any and all claims.
- C.
A provision that permits us to terminate a franchise before the expiration of this term except for good cause.
- H. A provision that requires you to resell to us items that are not uniquely identified with us. This subdivision does not prohibit a provision that grants us a right of first refusal to purchase the assets of a franchise on the same terms and conditions as a bona fide third party willing and able to purchase those assets, nor does this subdivision prohibit a provision that grants us the right to acquire the assets of a franchise for the market or appraised value and has failed to cure the breach in the manner provided in Item 17(g).
- I. A provision that permits us to directly or indirectly convey, assign or otherwise transfer our obligations to fulfill contractual obligations to you unless a provision has been made for providing the required contractual services.
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- If our most recent financial statements are unaudited and show a net worth of less than $100,000, you may request that we arrange for the escrow of initial investment and other funds you paid until our obligations, if any, to provide real estate, improvements, equipment, inventory, training or other items included in the franchise offering are fulfilled. At our option, a surety bond may be provided in place of escrow.
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- THE FACT THAT THERE IS A NOTICE OF THIS OFFERING ON FILE WITH THE ATTORNEY GENERAL DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENFORCEMENT BY THE ATTORNEY GENERAL.
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- Any questions regarding this notice should be directed to: State of Michigan, Consumer Protection Division, Attention: Franchise Bureau, 670 Law Building, Lansing, MI 48913; telephone number (517) 373-3800.
Source: Item 23 — RECEIPTS (FDD pages 55–263)
What This Means (2025 FDD)
According to Mrcool's 2025 Franchise Disclosure Document, the amendment for Michigan addresses certain unfair provisions that are sometimes present in franchise documents. Specifically, it states that if the franchise documents include a provision that permits Mrcool to terminate a franchise before the expiration of its term without good cause, that provision is void and unenforceable against the franchisee. This amendment ensures that Mrcool franchisees in Michigan have some protection against early termination of their agreements without a valid reason.
Additionally, the Michigan amendment addresses other franchisee rights, such as the right to join a franchisee association and protection against being required to sign waivers that deprive them of rights and protections under the relevant franchise act. It also restricts Mrcool from requiring franchisees to resell items that are not uniquely identified with Mrcool, although Mrcool can retain a right of first refusal to purchase the franchise assets. These stipulations aim to protect the franchisee's interests and ensure fair practices within the franchise relationship in Michigan.
The amendment also includes a clause regarding Mrcool's financial stability. If Mrcool's most recent financial statements are unaudited and show a net worth of less than $100,000, a franchisee in Michigan may request that Mrcool arrange for the escrow of initial investment and other funds paid until Mrcool fulfills its obligations to provide real estate, improvements, equipment, inventory, training, or other items included in the franchise offering. Mrcool has the option to provide a surety bond instead of escrow. This provision offers a level of financial protection to the franchisee, ensuring that their investment is safeguarded until Mrcool meets its initial obligations. However, the FDD does not explicitly state that Mrcool is required to include a renewal provision in its franchise agreement for Michigan.