At the End of the Road

Part of the franchise agreement will cover what happens at the end of the term. Many franchise systems offer renewal options for the franchisee. In some cases, however, the franchise company will try to deny the renewal. There are 16 states that have franchise relationship laws in place. If the franchisor tries to deny renewal in one of these states, it may be violating state law. The focus of the laws in these 16 states is on regulation of the renewal and termination of franchises. Nearly all franchise statutes that address renewal issues require specific franchisee misconduct for a franchisor to be able to deny renewal. There are, however, some states (California and Wisconsin) that permit a franchise to deny renewal for economic reasons, such as a company-wide decision to discontinue franchising.

The conditions for any of these non-renewal situations would be a part of the original franchise agreement.