Renewal Deserves the Same Discernment as Your First Signing

Most conversations about the Franchise Disclosure Document center on the first-time franchisee, and they should. It's a life-changing decision. Renewal gets far less attention, even though the stakes can be higher: by then, the franchisee has a business with staff, customers, and revenue on the line.

The agreement you renew isn't the one you signed

At renewal, most franchisors require you to sign their then-current form of franchise agreement. If your original agreement was signed ten years ago, the terms have likely changed. Royalty rates, advertising contributions, technology fees, territory language, and transfer rules can all look different.

McDonald's 2026 FDD shows how this works in practice. Under Item 6, new restaurants and certain purchases pay a 5% royalty, while restaurants operated before 2024 remain at 4%.

Where to look in the FDD

Item 17 summarizes renewal, termination, transfer, and dispute resolution. For renewal, it typically states the conditions you must meet, such as signing the current agreement, completing a remodel, paying a renewal fee, and signing a general release.

Then compare the current FDD's fee and obligation Items to what you agreed to originally:

• Item 6: royalty, advertising, technology, and other ongoing fees
• Item 7: if a remodel is required, what it is estimated to cost
• Item 11: what support and technology the franchisor now provides
• Item 12: whether your territory protections changed
• Item 17: the renewal term length and what happens at the next renewal

Whether the franchisor must deliver a new FDD at renewal depends on the circumstances. Ask for the current one either way.

Questions to ask before you renew

• Which terms in the current agreement differ from mine, and how?
• What remodel or upgrade will I be required to complete, and on what timeline?
• Does the general release waive any claims I should understand first?
• How long is the renewal term, and will I have a right to renew again?

Discernment at both ends

Discernment gets a lot of attention at the beginning of the franchise journey. It matters just as much at renewal. Review the new agreement with a franchise attorney, and read it with the same care you gave the first one.