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A renewal fee is the fee a franchisee is often asked to pay if they wish to renew their franchise agreement when the initial term or any subsequent renewed term comes to an end - provided the franchisor agrees to the renewal.
In summary, you're only required to pay your initial franchise fee when you sign your franchise agreement. This is a one-time payment that gives you a license to own and operate your franchise business for an agreed upon number of years.
Franchise registration states include California, Maryland, Michigan, Minnesota, New York, and North Dakota. Franchise filing states include Connecticut, Florida, Kentucky, South Carolina, and South Dakota.
In contrast to the Franchise Registration States, where the franchising process is regulated by supplemental laws extending beyond federal franchise regulations, Colorado is considered a non-registration state.
If you are renewing the franchise, you need to update your business plan, review your financials, and implement any changes or improvements required by the franchisor. You also need to sign a new franchise agreement and pay any fees or charges.
The great majority of franchise agreements contain a renewal clause that allows franchisees to require their franchise agreements be renewed. Usually, the only exceptions are those franchise agreements that are granted for 20 years or more.
Washington State is a franchise registration state. Before offering or selling a franchise in Washington, you must register your FDD with the Securities Division of the Washington State Department of Financial Institutions. The initial filing fee is $600 and the renewal fee is $100.
Because once the agreement ends, you will lose the right to operate the business using the franchise products and branding unless you sign another agreement. You need to make sure you understand what your rights are to renew your franchise agreement so you don't find yourself without a business!