As you set goals for 2026, one task deserves early attention: checking your renewal dates. Franchisees do not have automatic or indefinite rights to operate under a brand. Renewal windows can open and close quickly, and missing one can have significant consequences for your business.
Below is what franchisees and multi-unit operators should keep in mind as the new year approaches and the types of communiques franchisors should expect.
Check Your Calendar and Don’t Let Dates Sneak Up On You
Franchise agreements typically run for a fixed term, often five or 10 years, depending on the industry. If you executed your agreement in 2016 or 2021, it’s time to confirm your renewal deadline.
Unlike subscription services or utility accounts, franchise agreements do not renew automatically. Franchisees are usually responsible for initiating renewals with the franchisor, and the agreement typically requires written notice well in advance, often six to 12 months before expiration. Missing that timeline can result in losing the contractual right to renew altogether.
Assess Your Business Before You Renew
Before notifying the franchisor, take an honest look at your business performance. What went well in the past year and what challenges remain? This review helps you decide if you should continue in the franchise system.
Whether your answers lean positive, negative or somewhere in the middle, begin preparing early. Consulting a NY franchise attorney familiar with the state’s franchise regulatory framework can help you understand what has changed in the system since you initially signed and what to expect going forward.
Renewals Are Not Extensions
A common misconception is that renewal simply continues the existing terms of the franchise agreement. In reality, most franchisors require franchisees to sign their current version of the franchise agreement at renewal. That updated agreement may include:
- Higher royalties or new fees
- Adjustments to territory protections
- Updated operational standards
- Modernized compliance or reporting obligations
Franchise agreements evolve, so it’s critical to compare your original contract with the new one. Even small changes can have operational or financial consequences. Work with your NY franchise attorney to evaluate what those changes mean for your business and whether any terms are negotiable.
Despite what some franchisors may suggest, neither state nor federal franchise law prohibits negotiation. While franchisors vary in how flexible they are, you will not know your options unless you ask, and an experienced NY franchise lawyer can guide those discussions.
Considering Other Paths: Selling or Leaving the System
Renewal is not your only option. Some franchisees choose to sell their business, whether to another franchisee, a third-party buyer, or the franchisor itself. If you’re exploring this route, your attorney must review the agreement’s transfer provisions. However, letting the agreement expire before closing on a sale transaction can result in losing the right to transfer the business.
Allowing a franchise agreement to expire without renewal or sale is also possible, but it comes with obligations. Franchisees typically must:
- Stop all use of trademarks immediately
- Remove branding from signage, uniforms, digital platforms, vehicles, and marketing materials
- Transfer or discontinue branded phone numbers, websites, and social accounts
Most agreements also include post-termination non-compete clauses, restricting one’s ability to operate a similar business for a defined period. These obligations should be reviewed early so you are not surprised after you exit the system.
Lease Renewals: Don’t Overlook Your Real Estate
Your franchise agreement is not the only contract requiring attention. Many franchise businesses operate from leased commercial space, and lease renewal deadlines can be just as strict.
Commercial leases also commonly run for five- or 10-year terms, with renewal notice periods ranging anywhere from 90 days to 12 months. Unlike franchise renewals, lease renewals often carry forward the same terms but at an increased rent.
A franchise attorney who also understands commercial leasing can help ensure your lease term and franchise term stay aligned. This is an often overlooked, but essential component of long-term stability. Incompatible expiration dates can create operational and legal challenges, especially if franchisors require specific location standards.
How Lusthaus Law Can Help Your NY Franchise
Never assume that the franchise renewal agreement will be a copy of the previous one, with a new date at the signature line. Working with knowledgeable NY franchise counsel during the renewal process can help protect your rights and interests during the next term of franchise operations.
Contact us today to learn more about how Lusthaus Law P.C. can help you navigate a clear path toward your franchise’s successful future.
