The franchise business will contact you by means of email and/ or telephone only to the email address and phone number you have provided.
By submitting the enquiry form you are consenting to send your personal information to the selected franchise business.
You also agree to receive further newsletter email marketing from What Franchise.
Is there a maximum number of times a franchise agreement can be renewed?
Generally, franchisors don’t grant perpetual renewals. The reason most franchisors don’t is that it can be difficult for a franchisor to terminate a franchise agreement or have sufficient grounds to refuse an automatic renewal under a renewal clause in a franchise agreement, even if a franchisee is performing badly.
Renewal clauses contain conditions that have to be satisfied if a franchisee is to receive a renewal, but those conditions are sometimes subjective and, as a result, there may be uncertainty as to whether the franchisor is entitled to terminate. Where there is uncertainty, issues can end up in court.
In view of the above, franchisors prefer a situation where after a fixed number of renewals, there is no contractual right in favour of a franchisee to renew. That has the advantage of being clear cut. However, a franchisor could renew the franchise agreement, even though it’s not obliged to do so.
Generally, in a five-year term you would expect two automatic renewals, in a 10-year term one automatic renewal and, in the case of the much rarer 25-year terms, you would not expect any renewal.
John Pratt is senior partner at specialist franchise firm Hamilton Pratt and has advised franchisors for over 25 years.
You might also be interested in
Answered by Mark Meyer
Mark Meyer writes: The pandemic has accelerated the trend commonly described as ‘the death of the high... read more
Answered by Shelley Nadler
Shelley Nadler writes: The law prohibits anticompetitive agreements that fix prices between businesses. A franchisee therefore controls... read more
Answered by Louise Harris
Louise Harris writes: The use of fixed fee versus percentage of turnover royalties (or management service fees)... read more
Answered by John Pratt
John Pratt writes: At the moment, nobody knows. Franchise agreements are all different, so the first thing... read more
Exciting Franchise Opportunities
Companies to Consider
ServiceMaster Clean Commercial
£76,903 gross profit in year 2
Up to £230,000
Ask for more information
Stagecoach Performing Arts
Jackson Fire & Security
Expense Reduction Analysts...
Through major banks
Get expert franchising news delivered straight to your inbox
Franchise news, advice and new opportunities delivered weekly.
Must Read Articles
Added one year ago | 2 min read
Added 4 days ago | 2 min read
Added 5 days ago | 2 min read
Find your next business opportunity
Search 100s of UK franchises and become your own boss today.
What Franchise Newsletter
Keep up to date with all the industry news