Check whether a renewal or extension is a franchise sale
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- Compare the renewal or extension with the existing agreement, note any interruption in operation, and list terms that differ. Do not decide whether a difference is material.
- What the lawyer must review
- 16 CFR 436.1(t) says a sale of a franchise does not include extending or renewing an existing franchise agreement where there has been no interruption in the franchisee's operation, unless the new agreement contains terms and conditions that differ materially from the original agreement. If the renewal is not a sale, the pre-sale disclosure duty in 16 CFR 436.2 does not arise from that definition. The lawyer decides whether any difference is material and whether operation was interrupted. ABA Model Rules 1.1 and 5.3 and Formal Opinion 512 leave that decision with the lawyer.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Potential support includes identifying points for review. Confirm the tool’s capability and permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Review operative clauses in the complete document, including definitions, cross-references, schedules and inconsistencies with the instructions.
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.
Related tasks
Draft or review a franchise disclosure document against the prescribed headingsCheck the franchisor's disclosure and any registration the jurisdiction requiresDraft or review a franchise agreement from the disclosure and the term sheetBuild a franchisee due-diligence issues list from the disclosure pack