What items are excluded from compensation if Pearce Bespoke doesn't renew a franchise in Michigan?
Pearce_Bespoke Franchise · 2025 FDDAnswer from 2025 FDD Document
- (d) A provision that permits a franchisor to refuse to renew a franchise without fairly compensating the franchisee by repurchase or other means for the fair market value at the time of expiration of the franchisee's inventory, supplies, equipment, fixtures and furnishings.
Personalized materials which have no value to the franchisor and inventory, supplies, equipment, fixtures and furnishings not reasonably required in the conduct of the franchise business are not subject to compensation.
This subsection applies only if: (i) the term of the franchise is less than five (5) years, and (ii) the franchisee is prohibited by the franchise or other agreement from continuing to conduct substantially the same business under another trademark, service mark, trade name, logotype, advertising or other commercial symbol in the same area subsequent to the expiration of the franchise or the franchisee does not receive at least six (6) months' advance notice of franchisor's intent not to renew the franchise.
Source: Item 22 — CONTRACTS (FDD page 39)
What This Means (2025 FDD)
According to the 2025 Pearce Bespoke Franchise Disclosure Document, in Michigan, if Pearce Bespoke does not renew a franchise agreement, the franchisee may be entitled to compensation for the fair market value of certain assets. However, there are specific exclusions to this compensation.
Pearce Bespoke is not required to compensate a franchisee for personalized materials that hold no value for the franchisor. Additionally, compensation is not required for inventory, supplies, equipment, fixtures, and furnishings that are not reasonably necessary for operating the franchise business.
However, these compensation rules only apply under specific conditions: (1) if the franchise term was less than five years, and (2) if the franchisee is prohibited from operating a similar business under a different brand in the same area after the franchise expires, or if Pearce Bespoke fails to provide at least six months' advance notice of their decision not to renew the franchise.