Geared Up Issue 2 2015 | Page 33

2 member from the non-compete), make sure those changes are carried forward into your renewal franchise agreement. Finally, if you want to make any changes to the structure of the ownership group (e.g., changing percentages of ownership or adding a son or daughter to the franchise agreement), doing so during renewal is often a good idea, and can oftentimes save you money related to paperwork and transfer fees. In the end, renewing a franchise agreement is usually not as exciting as signing a new one, but, if you follow the steps in your agreement and work proactively with your franchisor to address certain issues, it does not have to be an unnecessarily painful process. While this article provides some general guidance on the renewal process, it is not a substitute for your obtaining advice, legal and otherwise, related to your unique situation. Before signing a renewal agreement, it is always a good idea to reach out to your attorney, the association, and/or a trusted adviser to make sure that you fully understand your rights and obligations. G J. Mark Dady is a partner at Dady & Gardner, P.A. His practice is focused on the representation of franchisees, dealers and distributors located throughout the United States. For more information, visit www.dadygardner.com, call 612-359-5488 or email [email protected]. Buy a Lifelong Investment for Your Gym! Quick, Cost-Effective Communication Motorola Two Way Radios Help You... 3 • Inform trainers of client arrival • Communicate discretely and effectively in ANY situation • Minimize interruptions Powerful TWO WAY radio solutions. 2wayradiopower.com www.2wayradiopower.com • [email protected] MOTOROLA and the Stylized M Logo are registered trademarks of Motorola Trademark Holdings, LLC and are used under license ©2015 Motorola Solutions, Inc. All rights reserved. GearedUp | 2015 Issue 2 franchisors can use the lack of written notice as an easy way not to renew a franchisee. If you have not done so already, it is a good idea to put calendar reminders in place 12 months before the expiration of your franchise agreements, and, when you receive the reminder, send the written notice. Even if you are not certain you are going to renew, sending the notice does not obligate you to renew, it just starts the renewal process. Additionally, make sure that you are in compliance with your franchise agreement at the time you send the written notice, as franchisors can typically refuse to renew your franchise agreement if you are not in compliance at the time of your request. Second, once you’ve provided the required written notice and started the discussion related to renewal, the next big issue a franchisee typically faces is how much remodeling and/or upgrading the franchisor will require as a condition of renewal. While some amount of remodeling is often unavoidable, keep in mind that the 2015 Planet Fitness franchise agreement, as well as the Memorandum of Understanding (MOU) retroactive amendments all of you should be receiving soon, expressly requires Planet Fitness to be reasonable in connection with the remodeling and upgrade requirements for renewing franchisees. That does not mean that you will be able to totally avoid the obligation to remodel/upgrade, but it does mean that, among other things, Planet Fitness will be required to act reasonably when setting the specifics related to your individual remodel/ upgrade and work with you to structure the remodel to avoid unduly or unnecessarily impacting your business (e.g., work with you to avoid remodeling during your busiest times of the year). In addition, as a result of the MOU amendments, if you completed a substantial remodel or a substantial replacement of equipment in the two years before renewal, you are generally not going to be required to remodel the same areas or replace the same equipment in order to renew. In short, while you will have to spend some time and money remodeling and replacing equipment, which, I believe, most franchisees agree is good for the brand, Planet Fitness is required to work with you to ensure that the process is not unnecessarily or unreasonably painful. Finally, after complying with the procedural renewal requirements and working out the issues related to remodeling/upgrading, the last key step in the renewal process is the execution of a new franchise agreement. While the association was able to obtain substantial changes on behalf of its members in 2015, the franchise agreement you are signing is not an agreement between the association and Planet Fitness — it is an agreement between you and Planet Fitness. Accordingly, it is important that you are comfortable with the terms of the renewal franchise agreement, and that you understand your rights and obligations under the renewal franchise agreement. In addition, if you have an area development agreement that impacts the terms of your franchise agreements (not just initial franchise agreements, but renewal franchise agreements as well), you should ensure that the renewal fra