Legislation Regarding Renewal Provisions in Arizona Considered

A bill introduced on February 10 in Arizona potentially imposes significant changes on the renewal terms of franchise agreements entered into in Arizona. Specifically, it would require franchise agreements subject to the legislation to contain a provision allowing the franchisee to renew its right to operate as a franchisee for three successive five year terms, provided that the franchisee is not in material breach of the franchise agreement during the term prior to the next renewal term.

Furthermore, this bill would prohibit the payment of a renewal fee, would require the renewal franchise agreement to be on the same terms and conditions the franchisor is customarily granting to new franchisees, and would require the franchisee to give written notice of its intent to renew between 180 and 90 days prior to the expiration of the term.

For further information on Arizona House Bill No. 2582, including the status of this bill, click here.