It is highly unusual, today, to encounter franchise agreements which do not stipulate a fixed period, with or without an option to renew. This is because experience has taught both franchisors and franchisees that it is in the interests of both parties to review their business relationship from time to time to ensure that both are comfortable that they are obtaining the maximum benefit from it”, explains Ian Jacobsberg of Eversheds attorneys. Jacobsberg, acts for numerous well known names in the franchising sector, advising on general contractual and commercial issues as well as competition matters and the protection of intellectual property.
Duration of contract
While researching a franchise, you should know that the duration of a franchise agreement will be determined by agreement between the parties. There are three possible scenarios:
- The agreement may stipulate that it is in perpetuity and then may only be cancelled in the event of a breach by one of the other party;
- The agreement may not stipulate a period at all, in which event it can be cancelled by either party on reasonable notice to the other; or
- The agreement may be for a specified duration, with or without an option by either party to renew it.