What are the common conditions of renewal?

It is usual for renewal of the franchise agreement to be subject to the franchisee’s material compliance with the terms of the agreement during the initial term. A franchisor is unlikely to want to be tied into renewing an agreement with a franchisee that does not perform well. The franchisee must also not be in breach at the time the renewal is applied for.  The franchisee may also be required to make significant capital improvements to its current business to bring it up to the standard to which a new franchisee would adhere. These improvements may be considered necessary by the franchisor to ensure that the franchise business is kept competitive and up to date. Another condition of renewal is that the franchisee is required to sign the then current form of the franchise agreement. A franchisee may want to seek assurance regarding the financial provisions in such current form agreement. Often a renewal is dependent upon the payment of a renewal fee.  In most cases the services and goods provided by the franchisor on initially entering into the agreement will not be provided on renewal, and thus the renewal fee should be less than the current initial fee for new franchisees.