Franchise term
What it means
The franchise term is the fixed period you have the right to operate under the agreement. It typically runs five to seven years, though some are shorter or longer, and it is one of the most important numbers in the deal.
The term must be weighed against your payback period and the lease. A term too short to recoup your investment, or shorter than your lease, creates real risk.
In practice
Compare the franchise term against your expected payback and the lease length. If the fit-out takes four years to recoup, a three-year term with uncertain renewal does not give you a fair chance, negotiate.
A real example
A buyer facing a $250,000 fit-out negotiates a seven-year term instead of five, so the agreement comfortably exceeds her four-year payback and matches her lease.
Franchise term, FAQs
How long is a typical franchise term?
Commonly five to seven years, though it varies. The term should be long enough to recoup your investment and ideally align with your lease.
What happens at the end of the franchise term?
The agreement ends unless renewed. Renewal usually depends on conditions and notice, and may attract a renewal fee and refit, check your rights before signing.
See the full franchise glossary, the Fee Index or our buyer guides.