Franchisees who are approaching a renewal period should already be at least somewhat familiar with the terms of their franchise agreement, but reviewing the contract is never a bad idea. Specifically, you will want to understand how the renewal process works, what is required for you to initiate or request renewal, what renewal fees are due, and what deadlines there are throughout the process.
Although the vast majority of franchisors work hard to build a successful franchise network, and work hard to be transparent, there are some that are less than scrupulous and try to take advantage of their franchisees and often try to attract new franchisees using dishonest, unfair, and sometimes fraudulent tactics. It is crucial that you are well-informed on the details of the franchise opportunity you are considering. Franchise Disclosure Documents and Franchise Agreements can provide much-needed information. However, these two documents are often confused with one another. While these documents contain similar information, they are used for two different purposes.
Every business owner knows they will eventually exit their current business. However, they usually only have a vague idea of what that exit will look like. Some owners want to extract value from the business; so, they can retire or simply move onto something new and different. Other owners want to leave a legacy and have a family member or key employee succeed them. Most have the sentiment that they’ll sell, or turnover, their business when the time is right. Unfortunately, successful transitions aren’t guaranteed. Over 70% of businesses fail to sell. Only 30% closely held and family businesses survive the second generation, with only 12% lasting through the third generation. The number one reason a business fails to successfully transition is because the owner failed to plan their exit.
