Franchise contracts, in most industries, range from five to ten years. On occasion, a franchisor may offer early renewal incentives. This is typically done to provide additional services and benefits to their existing franchisees. In addition, early renewal allows the franchisor to position itself to more aggressively develop member resources as well as to expand market share. When market share is expanded, franchisees and franchisors secure increased business opportunities and profit potential. Therefore, early renewals can be advantageous to both parties.
Even if not publically offered, a franchisee can always request an early renewal. An ideal reason a franchisee may consider doing so would be to secure additional privileges or benefits offered in newer franchise agreements which might not have been available in former agreements. Further, royalty and service fees generally increase over time like everything else, so another reason to renew early is to circumvent fee increases that will inevitably occur. It should be noted that the franchisor generally controls the franchise renewal options.
So, if you are a franchisee who is pleased with your franchise relationship and are fully committed to the long term growth of your business, then investigating an early renewal of your franchise is by all means a good thing to do!
Scott Gill
Senior Vice President
Scott.Gill@rwnc.net
