Franchise agreement renewal: what to expect
The end of your term is a decision point for both sides. Here is how franchise renewal works and how to go into it prepared.
How does franchise renewal work?
What the franchisor can require
- A renewal fee, if the agreement provides for one.
- A refit or upgrade to current brand standards, sometimes a significant cost.
- Signing the current-form agreement, which may carry different fees or terms than your original.
- Meeting performance or compliance conditions set out in the agreement.
Notice and the Code
The Franchising Code 2025 requires the franchisor to notify you, well before the term ends, whether it intends to renew or extend, so you are not left guessing. If renewal involves a new agreement, you receive disclosure and the usual pre-signing period. Diarise your term-end date and the notice window; do not rely on the franchisor reminding you at the last minute.
How to prepare
Start early. Review your renewal clause a year out, budget for any refit or renewal fee, and get the current-form agreement reviewed by a franchise lawyer. If you do not intend to renew, check for restraint-of-trade clauses that limit what you can do afterwards, and plan your exit accordingly.
- End-of-term notices: the 6-month rule and what your franchisor must tell you8 min
- How long does a franchise agreement last?6 min
- Old Code or new Code? How to tell which Franchising Code governs your agreement10 min
- Refused a renewal? When a post-term restraint of trade stops working9 min
- Who owns the goodwill in a franchise? Exit value, forced sales and non-renewal9 min
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Frequently asked questions
Do you have an automatic right to renew a franchise?
Not necessarily. Whether you can renew, and on what terms, depends on your agreement. Some grant renewal on notice; others end and offer a fresh agreement on current terms, which may differ. The Franchising Code sets notice obligations but does not guarantee renewal.
What does it cost to renew a franchise?
It depends on the agreement. Renewal can involve a renewal fee, a refit to current brand standards, and signing the current-form agreement with potentially different royalties. Budget for these well before your term ends.
When will I know if my franchise will be renewed?
The Franchising Code 2025 requires the franchisor to notify you before the term ends whether it intends to renew or extend. Diarise your term-end date and the notice window rather than relying on a last-minute reminder.
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