What's Your Next?

How Do You Exit a Franchise - Franchise Disclosure Document Item 17

June 29, 2023 Stacey Riska
What's Your Next?
How Do You Exit a Franchise - Franchise Disclosure Document Item 17
Show Notes


Today we're marching forward again into Item 17 of the Franchise Disclosure Document (FDD), which is an interesting item. Item 17 has to do with the end of your franchise agreement, meaning that when you acquire a franchise, one thing you highly want to consider when acquiring it is having some type of exit strategy before you even get started. 

What Item 17 really covers is what are the options when you reach the end of your franchise agreement's life. For instance, one of those is renewal. In our current franchise that we own, we have a 10-year agreement period, and one of the options is to simply just renew that for another 10 years. We've actually done that once already. There are basically four different areas of item 17 that need to be highlighted. 

Renewal is, as the word implies, you're going to renew your franchise agreement.

Most franchise agreements have a 10-year term, but your Franchise Disclosure Document will tell you what that period is. This section will tell you how you can renew and if there are any fees. For example, some franchises may require you to notify them that you intend to renew or not renew and may say you need to do that within 30, 60, or 90 days before the renewal date. 

It will also delineate if there are any fees that will be paid in regard to renewing. In our franchise, we renewed our franchise agreement. You'll be very glad to know that you're not going to have … 

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