A franchise agreement creates obligations for franchisors to provide intellectual property rights, guidance for how to run the business, and training opportunities. Franchisees must pay an up-front cost and may continually contribute a portion of their earnings moving forward.
Regardless of the exact terms of the franchise agreement, the agreement must have an agreed period of operation. Once the designated term ends, the franchisee retains no right to use your intellectual property and must cease their operations—ending any profits from the venture for either party—unless they seek and are granted a renewal.
A franchisor lawyer in North Carolina could help negotiate and assist in renewing franchise agreements. Whether this involves keeping the same terms or amending your old agreement, a knowledgeable franchise attorney could help you maintain your franchise relationship and revenue.
Franchise agreements are contracts in the eyes of the law, meaning they must follow the basic rules of contract construction. One such rule is that a contract must have a specific time frame. A failure to include a time limit can lead to confusion amongst the signatories and potentially allow a court to render the contract invalid.
In addition to outlining the length of the contract, the time frame should also provide a franchisor with a remedy should the franchisee continue operations after the expiration of the franchise agreement. A Charlotte franchisor attorney could provide additional information about time limits and renewing franchise agreements.
While the presence of a term limit is an essential component of a franchise agreement, it can create potential problems for both parties. For example, the relationship may be so profitable that the impending end of the franchise agreement would be financially detrimental to both parties.
In that case, a franchise agreement extension may be a viable option. Both parties may execute an entirely new franchise agreement for a new period under similar terms. Alternatively, they may sign an addendum to the existing agreement that extends the period further. However, addendums are generally not preferable.
Another option is to negotiate a modification of the franchise agreement. Perhaps one party is generally satisfied with the terms of the original agreement, but some circumstance necessitates a change in terms. In these scenarios, a franchise renewal lawyer could help represent a North Carolina franchisor’s interests and work on their behalf to mold an agreement that best serves those needs when the time comes to consider a renewal.
Every franchise agreement must come with a time limit, the expiration of which means that a franchisee can no longer sell your products or services or profit from their sale. Some franchisors may wish for the relationship to end with the expiration of that contract, while others may wish to continue a profitable enterprise. In certain states, it may be more difficult to not renew a franchise agreement.
If you and your franchisee both desire one, a Charlotte franchise renewal lawyer could help you negotiate an extension to an existing franchise agreement. Once retained, your legal representative could help identify your needs, establish achievable goals, and work towards satisfying those goals in a renewed franchise agreement. Call today to find out more about renewing franchise agreements.