How long does a franchise agreement last?

Franchise agreements can last for periods as short as three years and as long as 20. However the NatWest/British Franchise Association Franchise Survey 2010 reports that franchise agreements in the UK are predominately for a fixed term of five years, with rights to renew at the end of the term. The term of the agreement and any rights to extend or renew will be set out in the franchise agreement. A franchisee will want to be able to operate his business long enough for him to amortise his initial franchise investment and for the term of the agreement to be long enough for the franchisee to realise the value of his business on transfer. Some franchisors grant lengthy terms (20 years, for example) with no rights of renewal. In such cases the franchisor may well offer a new franchise agreement at the end of the 20-year term, but it will be under no obligation to do so.The franchise relationship should be capable of subsisting on a long-term basis, as long as both parties observe their respective obligations. There may be various reasons for a relatively short initial period - say, five years - but most franchise agreements allow for the franchisee to be able to exercise a right of renewal. There are usually conditions attached to renewal, such as the franchisee having performed his obligations under the agreement, refurbishment and re-equipping of the franchise business, and the franchisee having entered into a new agreement in the form of the franchisor’s then current agreement.