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Franchise Your Business Model & Expand Your Marketplace

Posted by XboxMaster on July 18th, 2010 No Comments

Do you ever think that your particular business has become too successful? Of course not, anyone who is successful in business desires nothing less than success out of their business. But there are times when the business of doing business becomes overwhelming because the demand for services and products has exceeded the ability of a local business to provide for an ever-growing customer base. Perhaps it’s time to franchise your business. Franchising your business is a great way to continue in the success and growth of your particular business beyond your personal capability to oversee and run that business. If you have people asking if your business is for sale, or if you provide franchise opportunities, then it’s definitely time to consider whether or not franchising is the right move for your business. If so, here are the steps that are necessary to make sure that you franchise in the right way.

Step 1 – Branding

Your franchise needs to be branded. When people look at a business for sale, the biggest draw to buying into a franchise rather than starting a new business is the value that comes from recognizable branding franchising directory. If you have a good logo, quality name, and reliable service that is associated with your brand and your product, then not only will customers buy it, but franchisees will buy it, too. Spend the time and money it takes to brand your business well so that it will recognizable and desirable.

Step 2 – System

When someone looks for a franchise opportunity, usually they desire to own their own business but are looking for a business plan or model that is proven to work. When deciding to franchise it is imperative that you develop the system that franchisees will follow. This is important for two reasons, the first is that you want your future franchise owners to succeed for themselves and you want them to appreciate being a part of your franchise. The second reason is that you want to make sure that your franchise owners are not giving your business a bad name. By providing a system that represents you and your business well, you allow everyone involved in your business opportunity to provide a unified business model that customers will appreciate.

Step 3 – The Support Service

Franchise investors are looking for business for sale because they want assistance. If they had it all figured out for themselves they would be running their own business, not looking for a franchise for sale. It is critical that just as you work to maintain customer service and support with your customers that you develop and maintain service and support with future franchise owners. The number one priority for most franchisees is that the franchiser provides extensive training on how to run the franchise and ongoing support throughout the course of the business to ensure them that they will not be left alone.

Step 4 – The Financial Arrangements

You want your franchise to be a good value. Something that people will want to invest in and feel like they are going to profit from being a part of your business. You also want to make it clear that your business is to be taken seriously, and there is an element of personal investment and risk involved in not putting everything you have into running a franchise. It’s important to understand the agreement you will have between franchise owners, what costs you will charge, what percentage of profits or fees will be paid to you to maintain service, support, supply, etc.

Step 5 – Recruiting Franchisees

So you’ve decided to franchise? That’s not going to mean much if there is no one that wants to purchase a franchise from you. Franchising is a whole new level of sales and marketing. There are a variety of websites that provide matching services and lead generation for franchisers. Decide what fees you are willing to pay, what costs you can dedicate to advertising and recruiting and find a way to promote your business. You now have two things to sell, the product or service you provide to your customers, and the business as a profitable venture for your franchisees.

Step 6 – Becoming a Franchiser

Now that you are ready to actually franchise there are a few more steps to take. Seek expert advice from the British Franchise Association. It’s invaluable in providing a wealth of unbiased step-by-step information for potential franchisers. Research the market to ensure that products and services are competitive, valuable, and desired in multiple areas. Test the franchise in the form of a pilot operation lasting at least 12 months or longer. The pilot scheme should be undertaken at more than one location in order to test the concept in differing geographical and economical areas. Establish a central management core. This will probably mean turning over your original business to competent successors so that you can focus on managing your operation as a whole. Finally, develop marketing, sales, and advertising strategies to promote the franchise network.

Step 7 – Join the BFA

Once you are a franchiser, join the British Franchise Association. The benefits of membership are many including: Publish recognition and credibility, increased public awareness of member franchises through BFA pr and publications, inclusion on the BFA website, national and regional forums and training, assistance with international development of member franchise networks and much more.

If you have understood the value of becoming a franchise operation, it means that you understand the importance of networks and business coming together and sharing information and helpful tactics. The BFA is a great association that provides many small business owners with ways to become large franchise providers. Not only will you experience growth and success as a franchise owner and operator, but you are also providing countless others through your franchise the chance to fulfill their dreams of becoming small business owners themselves.

Posted in Business, Franchising

Franchising – Getting Over the Fear of Buying One

Posted by XboxMaster on July 14th, 2010 No Comments

How To Achieve The Basic And Most Obvious Goal Of A Franchise: To Make The Relationship Beneficial To Both The Franchiser And The Franchisee.

Franchising can be likened to having a car after a trip to the car dealer. Once we are done with choosing a franchise or deciding to franchise our business, we would need to address this crucial question: in the same way that we need to get the car out of the dealer’s premises after paying for it, in the same way that we need to get the car out of the dealer’s premises after paying for it, how do we make the franchise work once it’s in our hands?

Much has been written on how to franchise a business or to choose one, but this particular phase of franchising is simply the tip of the iceberg, so speak. It is making the franchise work making it succeed and grow into a viable and vibrant business that’s really the heart of the matter, and I must say that this is a challenge that is bound to test the maturity of both the franchiser and the franchisee.

The basic and most obvious goal of a franchise is, of course, to make the relationship beneficial to both parties, but even then, we must recognize that our actions in going into a franchise relationship may not necessarily be motivated by the material benefits that we can derive from it.

It could be that the benefits we expect are primarily social – “I want to own or belong to a successful team.” “I can prove my business has excellent potential.”- or psychological- “I just would love to do what franchise concept calls for.” “by franchising, I can now expand my business.” – or perhaps even emotional – “I will need a support system to start my business.” “I won’t be alone but have other entrepreneurs managing similar branches.” Still, the bottom line w0ill ultimately be the financial benefits that both parties can derive from the franchise relationship.

Indeed, franchising may be distinct from other means of expanding a business, but the expectation of a good financial return will always be at the root of it.
As in driving a good racing car to peak speeds of up to 220 kilometers per hour, you can make the franchise engine work at peak efficiency only if all of its components are working smoothly and harmoniously. Franchises are like vested cars in races -they have to be very well maintained and their parts must always be kept in tip – top condition.
So, to pursue the analogy further, if your franchises were a car, how would you make it work so you can derive the maximum benefit from it and harness its full potential?

The Operations Manual

The first thing to do is to make the franchise Operations Manual work for you.

Oops! Don’t make the mistake of keeping that manual in a secure and safe place or, even worse, keeping it under lock and key. The Operations Manual is meant to be understood and regularly referred to as you operate your franchise. You must read and fully understand the operating manual of the car. Why? It’s because that car manual identifies all the parts of the car, explains how they function, and shows the user how to maintain them. In the same token, the Franchise Operation Manual contains all the information you need to make the franchise functional, whether you are the franchiser or the franchisee. Because it prescribes in detail the standards of the business model, the Franchise Operations Manual is what will enable the franchise system to achieve uniformity and consistency in its implementation.

The franchisee should use the Operations Manual as the primary guide for running his or a static and inflexible set of rules. The franchiser should regularly update and improve it to enable the franchise system to keep up with technology. It won’t be an understatement to say that a franchise system that doesn’t regularly update its Operations Manual is headed towards disaster sometime soon.

The Communication Fuel

Tons of articles have been written about the importance of communication not only in franchising but also in general. To go back to the car analogy, what will keep the car running to our desired destination is fuel. In a franchise system, the equivalent of the car’s fuel is communication. It is communication that will enable the major participants in the franchise system – the franchiser and the franchise – to achieve unity of vision and objectives and to agree on how to achieve them. When there is basic acceptance of the importance of often dialogue between franchiser and franchisee, the franchise system is greatly enriched and grows much faster.

Posted in Business, Franchising

How to Negotiate Your Franchise Agreement Template

Posted by XboxMaster on June 29th, 2010 No Comments

An individual who signs a franchise agreement template is executing a valid legal contract. It requires the franchisee to fulfill certain obligations and follow guidelines for operating their franchise.

Before you sign the franchise agreement you need to be comfortable with all of its provisions. In order to achieve this comfort level you and your franchise attorney may feel it necessary for the franchisor to make changes to the agreement. Some franchisors will negotiate terms of their franchise agreement while others will not. Quite often, the decision to negotiate is based upon the size and maturity of the franchisor. The larger franchisors find it much easier to say “no”. Although franchisors are guided by franchise regulations, state statutes and sound business practice, certain provisions can be negotiated and changed.

Before you arrive at the point of negotiating your franchise agreement there is a process you’ll need to follow.

· Engage An Experienced Franchise Attorney To Review The Agreement

· Confirm That The Franchisor Will Negotiate Terms Of The Agreement. Some franchisors will not make any changes to their agreement. On the other hand some franchisors may have unreasonable or onerous terms in their franchise agreement. In order to protect yourself make sure your attorney reviews the agreement to identify any possible issues even though you can’t negotiate the agreement.

· Recognize That Certain Terms Are Non-Negotiable

Royalty fees, territory size, termination provisions, length of the agreement, non-competes and legal venue are examples of what are considered the “untouchable” provisions. Few if any franchisors will negotiate or change these provisions.

· Focus On The Important Points In The Agreement.Restrictions on products and services that you wish to sell

· Indemnification Provisions. Be careful that you’re not held liable for loses or damages that are not caused directly by the acts of you or your employees. You may request language, which does not require you to indemnify the franchisor if you follow the procedures and policies of the franchisor.

· Advertising. Provisions that require you to spend a set dollar amount or per-cent of sales on advertising may be lowered during your first few years of operation.

· The Transfer and Assignment Section. Be sure your attorney carefully reviews this section and that you understand your responsibilities and rights.

These represent some of the more noteworthy examples of sections in a franchise agreement, which you and your attorney may wish to negotiate. A franchise agreement is a complicated document and by design is favors the franchisor.

Make sure that before you sign on the “dotted line” you fully understand your obligations and are comfortable with the final agreement.

Posted in Business, Franchising

Franchised Outlets Must Maintain their books as per the Confidential Operations Manual

Posted by XboxMaster on June 27th, 2010 No Comments

A franchisee of the franchise system must maintain their financial records by Franchise Operation Manual Template, business records and reports in compliance with the confidential operations manual set forth by the franchisor. Each franchisor must make sure that the guidelines for the books, accounting system and business records are understandable and gone over in training. Additionally it would be recommended that such issues were addressed into franchising agreements prior to the commencement of the franchised outlet via Guide to Franchising.

In my franchising company I had inserted a clause to address this very issue. Below you will find the clause that I came up with that became part of every franchise agreement that our company signed;

3.17.1 Maintenance of Books; Reports

Franchisee must maintain full and complete records of all business done and revenue Franchisee receives through the Franchising Tools and Resources in accordance with generally accepted accounting principles employed in the Marketing Area or the United States and the standards and Confidential Operations Manual provided by Franchisor. These records will include, but are not limited to, order sheets, sales agreement forms, daily sales summaries, tax returns, financial statements, and invoices. Franchisee will date, file in consecutive order, retain for a period of five years, and make available to Franchisor for inspection and audit all of Franchisee’s records by reliable Franchise Agreement Template.

Franchisee, if a natural person or persons, will submit to Franchisor a list of all owners of the Franchise Business and the respective interests held by each as of the end of each fiscal year. Franchisee, if a partnership, will submit to Franchisor a list of all partners and the respective interests in Franchisee held by each partner as of the end of each fiscal yea Franchise Disclosure Document. Franchisee, if a limited liability company, will submit to Franchisor a list of all members and the respective interests in Franchisee held by each member as of the end of each fiscal year. Franchisee, if a corporation, will submit to Franchisor a list of all shareholders and the respective interests in Franchisee held by each shareholder as of the end of each fiscal year (provided, however, if Franchisee’s shares are publicly traded, the list of shareholders required will include only those owning five percent or more of the shares outstanding). The required report will be submitted to Franchisor within ninety (90) calendar days after the end of Franchisor’s fiscal year.

Franchisee will furnish Franchisor with unaudited financial statements for the Franchised Business within ninety (90) calendar days of the end of each calendar year signed by the Franchisee, if the Franchisee is an individual, or the majority partner, shareholder or member of the Franchisee if the Franchisee is a partnership, corporation or limited liability company, which shall include an income statement and balance sheet. If Franchisee is a division of a corporation, then the financial statements need only relate to the operations of such division. These statements must be prepared following generally accepted accounting principles through FDDs and UFOCs.

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Since this issue is so vitally important to the franchised business model to maintain consistency in control of the franchise system, each franchisor would be well advised to contact the franchising attorney who specializes in franchise systems. Then they might discuss their strategy to make sure that each franchisee is in compliance with such standards in the confidential operations manual. Consider this in 2006.

Posted in Business, Franchising

Franchiser Guide – 10 Tips For Choosing a Franchise Opportunity

Posted by XboxMaster on June 27th, 2010 No Comments

For those who have decided a Franchiser Guide could possibly be a great choice for you then being aware of what to try and do next can easily be the difference between disappointment and success. There are various important considerations to take into consideration once you’ve made the choice of going the franchise opportunity or non-franchise route.

Listed below are ten important considerations that can assist you on your way:-

1. Explore Choices

Use online franchise business directories, franchise shows and franchise publications to research the options available. You will find a huge selection of franchises available on the market so make sure you try to find something you’ll take pleasure in doing and that could suit your lifestyle and budget.

2. Produce a shortlist

After looking at a number of franchise opportunities you might be interested by, draw up a shortlist of 2 or three that you could really see yourself doing. Aquire their franchise information packs either by way of online contact request or pick up the phone.

3. Explore Background

It’s crucial that you identify who you’re dealing with as you will be making a considerable investment. Take a while to discover the franchise company’s working history. You may also wish to investigate the directors of the franchise companies and find out what other ventures they have got or are already associated with. You could find online tools, like the Companies House website, useful.

4. Get together with the Franchisors

As soon as you feel totally clued-up about your shortlist of franchisors, its time to phone them and plan to get together with them. Pay a visit to their central offices and get a feel for their business. At the same time as you’re there, ask for contact details for some of their franchisees as recommendations.

5. Talk to Franchisees

Contact your list of franchisees and ask them questions on how the franchise business performs for them as a commercial venture. Are they trading beneficially? Would they buy the franchise business over again given what they currently see?

6. Research Financing Avenues

There can be many avenues to financing. You may have your own funds to make an investment from savings or a redundancy. More choices could be an external sponsor or main high street banks. It pays to talk to a bank manager nonetheless, present your franchise plan and find some useful feedback as to what financing potential you might have.

7. Obtain Professional Advice

Many people determine they require some professional assistance in the investigation and purchasing process. For this reason, you can find specialist franchise business consultants who have a considerable knowledge of the intricacies of a franchise business that can aid with matching you to a franchise opportunity that works best for you in combination with helping everything proceed smoothly.

8. Acquire Legal Advice

You’ll have to sign a franchise contract as soon as you have decided on the most effective franchise opportunity for you. It’s vital that you get proper legal guidance from a franchise specialist lawyer who can help to make sure that any legal requirements are met and to help you understand the legal agreement you will be entering into.

9. Gut Feeling

How you are feeling about starting your franchise can’t be ignored. It’s normal to have many of queries, notably as you become close to making a choice. The franchisor, and any other franchise gurus you seek advice from through the process ought to have the ability to offer answers and assist you to along your way. However, if you are feeling distress at any point, take a step back to figure out what you might be worried about and settle it before moving forward.

10. Lets get down to some good old fashioned work

A franchise, similar to any other business, requires hard work. Don’t be taken in to think that a franchise works inevitably simply because its a ‘franchise’. A franchise provides a proven system… but the system needs to be worked hard as a way to build a strong and beneficial business

Posted in Business, Franchising

Understanding the Franchise Disclosure Document FDD Template

Posted by XboxMaster on June 21st, 2010 No Comments

Uniform Federal Disclosure Document (UFFD or FDD), formerly called the Uniform Federal Offering Circular, (UFOC) provides prospective franchise investors with information about a prospective franchise. Company history, background information, risk factors and financial statements are just a few of the items covered.

To protect and inform the investor, the Federal Trade Commission (FTC) determined that a standardized disclosure must be in place for companies to offer their businesses as a franchise. Because the format is standardized, it makes for easy side-by-side comparisons between companies.

The FDD is provided to potential investors of franchises. Which means that this document is usually given to prospective investors who have made efforts to qualify for any particular franchise. Usually a dialog has been established between the investor and the franchisor before the FDD is requested.

Regarding the format of the Franchise Disclosure Document FDD Template. It consists of cover pages, table of contents, main body and exhibits.

The cover pages are straight-forward. They contain the name, address, contact information and basic business information. It also stresses how the FDD should be used and where to go for additional help. There is also a state cover page which informs the investor that there may be state franchise laws. Additionally there is a paragraph on Risk Factors. This area points out potential risks inherent in the particular investment.

The table of contents simply list out the items that make of the body and exhibits of the FDD.

The main portion of the FDD is comprised of twenty-three items.

Item 1: The Franchisor and any Parents, Predecessors and Affiliates
Item 2: Business Experience
Item 3: Litigation
Item 4: Bankruptcy
Item 5: Initial Franchise Fee
Item 6: Other Fees
Item 7: Estimated Initial Investment
Item 8: Restrictions on Sources of Products and Services
Item 9: Franchisee’s Obligations
Item 10: Financing
Item 11: Franchisor’s Assistance, Advertising, Computer Systems and Training
Item 12: Territory
Item 13: Trademarks
Item 14: Patents, Copyrights and Proprietary Information
Item 15: Obligation to Participate in the Actual Operation of the Franchise Business
Item 16: Restrictions on What the Franchisee May Sell
Item 17: Renewal, Termination, Transfer and Dispute Resolution
Item 18: Public Figures
Item 19: Financial Performance Representations
Item 20: Outlets and Franchisee Information
Item 21: Financial Statements
Item 22: Contracts
Item 23: Receipts

In addition, there may be a number of Exhibits. These may include:

List of State Agencies/Agents for Service of Process
Franchise Agreement with Exhibits
Financial Statements
Lease
Collateral Assignment of Lease
Operations Manual
List of Franchisees, Current and Former
Release
Assignment of Franchise Agreement
State Addendum
Spousal/Partner Consent

To be able to invest in any franchise business, you will be required to have received the FDD. By familiarizing yourself with the format, you will have a better understanding of the franchise purchase process.

Posted in Business, Franchising

Franchising in the Future – Is There Anything You Can Do Now by Franchise Agreement Template?

Posted by XboxMaster on June 21st, 2010 No Comments

Owning a franchise is not a quick and easy way to get rich. It takes time, effort and a lot of hard work. This is the same irrespective of the nature of your start-up business. The benefits of franchising, however, are that no re-invention is required. The brand has already been established and you benefit from the support, marketing, established products, services and systems of the franchiser organization.

The decision to buy a franchise is not one that should be taken without extensive consideration, although the key to success is about following some straightforward steps:

1. Select a franchise business that you feel passionate about.
This does not just apply to a franchise but to any business whether you are an employee or the business owner. If you are passionate about you do, this will flow into your products and services, the customers and ultimately the bottom line profit. Understand what is important to you. It will be easier to evaluate the business opportunity and know whether it is right for you.

2. Select the right franchiser for you.
This has to do with choosing an established company with a proven track record and great reputation; even better if they belong to one of the national franchise organizations. Ensure that the business is run in accordance with franchising best practices. Make sure the business is profitable!

3. Assess the competition, the location & the business viability.
Is this an industry where there is growth? Ensure that the marketplace is not saturated with similar industry-types. It helps if demand (for the product or service) outstrips supply. Location is paramount. You may have the best franchise, with the best product or service, with the best customer support, but that all counts for nothing if your location is sub-optimal.

4. Develop a business plan.
Every profitable business has one. If nothing else it helps you develop your ideas and sense of what is important to get the business to be viable. Most start-up companies are too optimistic in their forecasts. A business plan puts some realism into your ideas. I know you don’t like the thought of writing one. But there are plenty of templates out there to choose from.

5. Get the right team and train them.
Without the right team on-board in your new franchise you are doomed to failure. Ensure that each person understands the values of the brand. Make sure that everyone is working towards the same goals. The appropriate training is important. Not just in the franchise system itself, but in the specific area that each person is operating.

6. Maintain a great franchisee – franchiser relationship.
Most breakdowns in franchisee – franchiser relationships boil down to poor communication between the two parties. Ensure from day one you understand each others expectations. Don’t just assume, find out! Communication must be both ways and at regular intervals. Use your franchiser’s experience to good use.

7. Optimise your income statement and monitor your cash flow.
One to avoid I hear you say. No way. Optimizing your income statement and understanding its sensitivities to things like products costs, day-to-day expenses, numbers of customers, etc. can be great fun. OK, well it could just save your business. And remember nothing is more important than cash flow. Without cash you have no business.

8. Market your franchise.
Most people believe that marketing is advertising and that advertising costs lots of money. Not necessarily true. There are many different marketing strategies out there – close to 200! But 99% of business owners are not deploying these strategies correctly, or are adopting only a single strategy at once, or are even not testing them on a small sample size first. This is one of my favorite subjects.

9. Operate the franchise system.
This to me is a given. The franchise system has been proven. You selected this franchise because it was successful. Why would you deviate from something that has been tried and tested and produces positive results? Oh, and deviation from your system means you are deviating from your franchise agreement!

10. Enjoy the experience.
So business can be fun? You bet. That’s why you chose this business in the first place didn’t you? Reward yourself for the hard work. Reward your team. Recognize their efforts. Go out and celebrate regularly. Franchise businesses can be successful, so go out and have some fun with your team along with Franchise Agreement Template!

Posted in Business, Franchising

A Review of Franchise Disclosure Document FDD

Posted by XboxMaster on June 19th, 2010 No Comments

If you have been shopping around for a franchise, or have attended any franchise expos in your research to select the perfect business opportunity for you, then you’ve come across a few Franchise Disclosure Documents. If you are unfamiliar with what a FDD is, then now is your chance to get familiar, because these documents are a crucial source of information and should play heavily into your decision making process. All franchisors are legally required to provide a FDD prior to any sort of legally binding commitment between themselves and a potential franchisee.

What is the FDD?

A Franchise Disclosure Document FDD is a company outline, legally required to be written in “plain [easy to read and understand] English”. This document provides a detailed overview of the franchising organization, it’s history and many specifics about its existing franchises. By law there are certain key facts that must be divulged by the FDD, regardless of how it may reflect on the franchisor.

Information About the Franchisor

Any FDD should contain a detailed overview of the parent company. Disclosed in the first few section of the FDD should be information regarding the company’s history and the way that the corporate structure is laid out. These opening sections must also divulge any law suits against the parent company by franchisees, regardless of whether or not the outcomes were favorable for the company. If the company has ever filed for bankruptcy, that information must also be disclosed. This information is required by law so that potential investors can understand exactly what they might be getting into should they pursue a relationship with an unreliable or fiscally unsound company.

Fiscal Information

Legally, there are certain financial details that must be stated within the FDD. This information includes franchising fees and start-up costs and other associated financial requirements for entering into a franchising agreement with the franchisor. Franchisors are not required to divulge any information that might be construed as a guarantee or even a speculation as to expected ROI. Doing so would make the franchisor vulnerable to lawsuits from failed franchisees.

What the franchisor will have to disclose is information regarding the average earnings of franchises across certain geographical areas. This information is useful for gaining an idea of what one might potential see, as far as profits are concerned, from a franchise in any given location. Those figures represent only potential and are in no ways guarantees of ROI.

Importance of the FDD

If you are even partially considering a franchising organization as a potential for your new business then you should request a copy of the company’s FDD (if one hasn’t been provided already) and read it. Then take the FDD and read it again. Once you’ve done that, take the FDD and read it a third time. That is how important this document should be to your decision making process. Read it, comprehend it, ask questions to the company’s representative if you are unclear about anything in it, take it to your attorney and have him or her review it. The Franchise Disclosure Document is your key to making an informed and intelligent investment choice.

Posted in Business, Franchising

Top Secrets to Franchise Agreement Negotiations

Posted by XboxMaster on June 19th, 2010 No Comments

Most all franchise agreements are only granted for a limited amount of time and there’s good reason for this finite limit. The only thing constant use change in franchising that is more true than ever. Once a franchise term has ended for the franchisee, often franchisors will grant a renewal term, which will start upon the date it which the old franchise term ended. This of course must be clearly discussed in the initial franchise agreement.

In our franchise agreements I came up with a clause that work well for my company and I have listed below for your review. I would not recommended you copy it word for word, but rather use this to help develop your thoughts and so you are knowledgeable about what a renewal term in franchising means;

1.3.2 Renewal Term

Subject to Section 1.3.3, Franchisee may renew its right to operate as a Franchisee of Franchisor for three (3) successive five (5) year terms provided that the Franchisee has remained in full compliance throughout the previous term and on the same terms and conditions on which Franchisor is then customarily granting new franchises; or, if Franchisor is not then granting any new franchises, then on the same terms and conditions on which Franchisor is then customarily granting renewal franchises by executing the then current form of such agreement. Franchisee will not be required to pay a renewal fee upon exercise of such right. Franchisee must give Franchisor written notice of intent to renew such right not more than one hundred eighty (180) calendar days nor less than ninety (90) calendar days prior to the expiration of the preceding term.

The renewed Franchise Agreement will be evidenced by the Franchisee signing the Franchise Agreement forms, which Franchisor is then using. These forms may vary materially from this Agreement. Royalty Fees, Advertising and Promotional Fund fees and other fees will be set at the then prevailing rates and terms. The failure or refusal to execute the Renewal Franchise Agreement forms within thirty (30) days after delivery to the Franchisee may be regarded as an election by the Franchisee not to renew. Upon renewal, the Franchised Business must remain located in the geographical territory designated in this Agreement. The Marketing Area may be modified and its geographic area may be reduced.

Franchisee will reimburse Franchisor for Franchisor’s reasonable out-of-pocket costs concerning the renewal. Franchisee will refurbish, remodel, and replace the Franchise equipment to conform to the then current Confidential Operations Manual and System. There will be no limitation on the amount that Franchisor may require Franchisee to spend on refurbishing, remodeling and replacement. Upon renewal, Franchisee must execute a general release, in a form prescribed by Franchisor, following applicable law, to release Franchisor from any claims Franchisee may have against the Franchisor or any predecessor, sister or co-branding companies of the Franchisor, their current or former shareholders, directors, officers, employees, agents and their spouses.

Before renewal, Franchisee or their designated manager will attend and successfully complete any retraining program Franchisor prescribes in writing. This will be done at the Franchisee’s expense, including travel, meals, lodging, and the then current training fee.

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Once you have the knowledge and fully understand what a renewal term in the franchise agreement is, then you must go see your own legal counsel and get advice from a franchise attorney on this subject. It is extremely important that a clearly defined renewal term including the conditions for are easily understood in plain English. I hope you will consider this in 2006.

Posted in Business, Franchising