Guide
Franchise renewal
Renewal is the one moment your bargaining position improves. Most franchisees let it pass without using it.
The sequence
Five things to do before the renewal date
Renewal is a negotiation with a deadline, and the deadline is usually in the agreement rather than in the diary.
01
Find the date
And the notice you have to give
Renewal rights are almost always conditional on giving notice within a window. Miss the window and the right can lapse entirely, converting a negotiation into a request.
02
Work out what you have
Right, option, or nothing
Read what the agreement actually gives you. A right to renew, an option exercisable on conditions, a right subject to franchisor discretion and a bare expectation are four different positions with four different strategies.
03
Price the alternative
What happens if you walk
Your leverage is the cost to the franchisor of losing the site, measured against your cost of leaving: restraint period, de-identification, make-good and the value of the goodwill you would forfeit. Do that arithmetic before opening the conversation.
04
Line up the lease
The two terms rarely match
A renewed franchise with no premises is worth nothing. Sequence the lease option and the franchise renewal so neither one is exercised without the other.
05
Ask for the amendments
This is when they move
Renewal is when franchisors are most willing to adjust territory definitions, refurbishment obligations, transfer fees and restraint periods, because the alternative is an empty site.
Download the guide
Franchise renewal
The full guide as a PDF, including the renewal timeline worksheet and the amendments most commonly granted at renewal.
Common questions
Renewal, answered
Does a franchisor have to renew?
Only if the agreement gives you a right to renew and you have complied with its conditions. Many agreements give an option rather than a right, and some give neither. The Code requires the franchisor to tell you whether it intends to renew, within set timeframes.
Can the franchisor change the terms on renewal?
Commonly yes. Renewal is often into the franchisor’s current agreement, which may differ materially from the one you signed. Compare the two documents before exercising anything.
What if I miss the notice window?
You may still be able to negotiate, but you will be asking rather than exercising. If the window has recently closed, get advice quickly. The position sometimes turns on franchisor conduct.
Should I renew or sell?
A transfer at the end of a term can be worth more than a renewal, but needs franchisor consent and usually attracts a fee. Both options should be priced before you commit to either.
Also relevant
Related services
Next step
Renewal date coming up?
The earlier we look at the agreement, the more of the window is still available to use.