Renewal of Franchise agreement

Renewal of Franchise agreement

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This is a document a renewal of franchise agreement for use in a franchising transaction.

A franchise agreement is a legal contract between a franchisor and franchisee. Under that agreement, the parties are bound for a specified term. Most franchise agreements provide for one or more renewal terms and a procedure describing how to renew the agreement.

This precedent should be used for a simple renewal of the franchise agreement when the franchisor is happy to continue on the same terms as the original franchise agreement.

Practitioners should note that most franchisors include a clause in their franchise agreements to allow them to issue a new franchise agreement on renewal that contains different terms to the original agreement. In that case, this precedent should not be used.

If the franchise agreement is renewed, the Franchising Code of Conduct cooling off provisions do not apply. On renewal, the franchisee must be provided with:

  1. an updated franchisor disclosure document;
  2. a copy of the Franchising Code of Conduct; and
  3. an information statement.

The franchisor must obtain a written statement from the renewing franchisee that they have received, read and had a reasonable opportunity to understand the renewal of the franchise agreement as well as disclosure documentation provided.

This form is rarely used.  In most cases, franchisors have the franchisee sign a new franchise agreement, being the franchisor’s then current franchise agreement, rather than a renewal.

This document has been authored for Lexis Nexis by Stephen Giles, Norton Rose Fulbright Australia with introductory notes by Jane Garber-Rosenzweig, Gable Lawyers.

This document is prepared with the assistance of Specialist Editor Stephen Newman, Executive Counsel, Ponte Earle.