Franchise Agreement Terms: What 259 Current FDDs Disclose

What Item 17 shows about franchise agreement terms

Item 17 is the one place in every franchise disclosure document (FDD) where the franchisor must summarize the contract’s renewal, termination, transfer and dispute-resolution terms in a fixed table. The FTC Franchise Rule requires a table titled THE FRANCHISE RELATIONSHIP with 23 rows, from a. length of the franchise term to w. choice of law, each cross-referenced to the section of the franchise agreement it summarizes (16 CFR 436.5(q), 2026 edition).

The rule also requires the row on renewal requirements to say what renewal means in that system, including a warning when the franchisee may be asked to sign a contract with materially different terms (16 CFR 436.5(q)(3)). The FTC Compliance Guide notes that in many systems renewal means signing a new agreement on then-current terms, while in others it is a simple extension (FTC Franchise Rule Compliance Guide, 2008, pages 80 to 81).

This study reads the Item 17 table in 259 current FDDs, one per brand, drawn from Minnesota CARDS filings for the same 259-brand sample used in our franchise royalty rates dataset. Where Item 17 was silent or disagreed with the attached franchise agreement, we recorded the agreement, because the agreement is the binding document. In this report, franchise agreement terms means the contract provisions Item 17 summarizes; fees are covered in the royalty study and court filings in our franchise litigation monitor.

Franchise agreement length: 10 years is the norm, not the rule

Two in three agreements run exactly 10 years. Of 259 FDDs, 170 (65.6%) set an initial term of exactly 10 years, and the median initial term is 10 years (Franchise Consultants and Brokers analysis of Minnesota CARDS filings, FDDs issued 2025 to 2026).

• 43 FDDs (16.6%) set a term under 10 years, most often 5 years (34 FDDs, 13.1%).
• 40 FDDs (15.4%) set a term over 10 years, led by 20-year terms (25 FDDs) and 15-year terms (11 FDDs).
• 6 FDDs state no single number (perpetual, lease-linked or format-dependent terms). Disclosed terms range from 3 to 35 years.

Sector matters more than the pooled median suggests. Lodging FDDs have a median initial term of 20 years, and the automotive median is 15 years, while most service and retail sectors cluster at 10 (Table 1). Sector medians rest on 17 to 27 FDDs each, so they describe this sample rather than every franchise in a sector.

Renewal: almost always offered, almost always on new terms

Renewal is offered in 94.6% of FDDs, but it nearly always means signing the franchisor’s then-current agreement. 230 FDDs (88.8%) give a conditional right to renew, 15 leave renewal to the franchisor’s discretion, and 14 offer no renewal (Minnesota CARDS filings, 2025 to 2026).

• Of the 245 FDDs that allow renewal in some form, 99.6% require the then-current form of agreement, 90.2% charge a renewal fee, 89.0% require a general release and 83.7% require remodeling or upgrading.
• 71.0% of those FDDs require all four.
• The median renewal term is 10 years; 111 FDDs offer 10-year renewals and 93 offer 5-year renewals. 70 FDDs make the renewal term shorter than the initial term.
• 101 FDDs allow exactly one renewal and 30 allow unlimited renewals. The median minimum notice to renew is 6 months.

Because renewal usually means a new contract, the fees and territory a franchisee holds in year 10 may differ from the ones signed in year 1. The FTC requires that warning in Item 17(c) (16 CFR 436.5(q)(3)).

Termination and transfer: who can end or sell the franchise

Franchisors rarely reserve a right to terminate without cause, but franchisees rarely get one either. 11 of 259 FDDs (4.2%) let the franchisor end the agreement without cause, and 21 let the franchisee do so (Minnesota CARDS filings, 2025 to 2026).

• 114 FDDs give the franchisee no contractual termination right beyond what law allows; 112 allow termination if the franchisor breaches and fails to cure.
• The median cure period for ordinary defaults is 30 days (226 FDDs use exactly 30 days); payment defaults have a median cure period of 10 days.
• 79.2% of FDDs make a default under another agreement with the franchisor a default under this one.
• On transfer, 97.7% charge a transfer fee, 92.7% require the seller to sign a general release, 91.5% give the franchisor a right of first refusal and 67.2% give it an option to buy the business or its assets.
• 99.2% let the franchisor assign the agreement without the franchisee’s consent.

Resale buyers inherit these rules: the first-refusal right and transfer conditions shape who can buy a resale and on what terms (see our franchise resale index).

Non-competes: 2 years and a set radius, except in lodging

A post-term non-compete appears in 88.4% of FDDs and in 95.0% outside lodging. None of the 18 lodging FDDs in the sample restricts a hotel owner after the agreement ends, while 229 of 241 non-lodging FDDs do (Minnesota CARDS filings, 2025 to 2026).

• Two years is the standard length: 197 of 229 post-term covenants (86.0%) last exactly 2 years, and 96.1% last 2 years or less. 19 last 1 year and 9 last 3 years.
• 84.7% state a mileage radius around the former location or territory. The median radius is 20 miles; the most common radii are 25 miles (57 FDDs), 10 miles (45) and 5 miles (26).
• 82.1% also bar competing near the brand’s other outlets, which extends the covenant beyond the franchisee’s own territory.
• 94.6% restrict competing businesses during the term.

Taken together, 167 FDDs (64.5% of all) pair a 2-year post-term covenant with a mileage radius. That is common, not universal. State law decides enforceability: Minnesota bars enforcing an unreasonable post-term covenant (Minn. R. 2860.4400 I), and Virginia has barred new post-term covenants since July 1, 2026 (Va. Code 13.1-563(A)(4)).

Dispute resolution: arbitration in most, the franchisor's home state in nearly all

71.4% of FDDs require binding arbitration, and 99.2% either require arbitration or fix court cases in one named state. 49.0% add a mandatory mediation step (Minnesota CARDS filings, 2025 to 2026).

• 91 FDDs require mediation then arbitration, 94 require arbitration without mediation, 36 require mediation then court, and 38 send disputes straight to court.
• Among US-based franchisors naming a court venue state, 220 of 228 (96.5%) pick their own home state. Among those requiring arbitration, 166 of 172 (96.5%) seat it in their home state.
• 201 of 223 (90.1%) put the court venue, the governing law and any arbitration seat all in the franchisor’s home state.

For a franchisee in another state, that usually means litigating or arbitrating away from home. Federal law makes written arbitration clauses enforceable (9 U.S.C. 2), and some state laws void out-of-state court venues while allowing out-of-state arbitration, for example Illinois (815 ILCS 705/4) and Minnesota (Minn. R. 2860.4400 J).

Governing law: the franchisor's state, across 35 states

91.1% of US-based franchisors choose their own home state’s law. 216 of 237 FDDs naming one state pick the franchisor’s home state; only 11 (4.2%) apply the law of the state where the franchise operates (Minnesota CARDS filings, 2025 to 2026).

The sample names the law of 35 states. Texas (29 FDDs), Florida (27), California (20), Ohio (15) and Delaware (14) lead (Figure 5). All 14 Delaware-law FDDs come from franchisors formed in Delaware and headquartered in other states. Choice-of-law clauses do not override state franchise statutes: Minnesota voids any provision, including a choice of law, that waives its franchise act for Minnesota franchisees (Minn. Stat. 80C.21), and Virginia now requires Virginia law for agreements under its retail franchising act (Va. Code 13.1-559(D)).

Jury, class and punitive waivers and shortened claim deadlines

Most franchise agreements in the sample waive a jury trial (79.5%), class or collective actions (87.3%) and punitive damages (85.3%). 174 FDDs (67.2%) contain all three (Minnesota CARDS filings, 2025 to 2026).

• 189 FDDs (73.0%) shorten the time to bring a claim. The median contractual limit is 12 months: 134 use 12 months and 43 use 24 months, often running from the event or from discovery, whichever comes first.
• By comparison, Minnesota allows 3 years for claims under its franchise act (Minn. Stat. 80C.17 subd. 5).

These clauses mostly sit in the agreement’s dispute section rather than in Item 17, so we searched the attached agreement for each one. A clause the search missed counts as absent, which makes these shares floors.

State addenda: how Minnesota rewrites the same clauses

255 of 259 FDDs (98.5%) carry Minnesota pages that override parts of the standard agreement for Minnesota franchisees. The overrides track Minnesota’s statute and rules (Minnesota CARDS filings, 2025 to 2026):

• 98.5% state the 90-day termination notice with a 60-day cure and the 180-day non-renewal notice (Minn. Stat. 80C.14 subd. 3 and 4).
• 96.9% state that litigation cannot be required outside Minnesota (Minn. Stat. 80C.21, Minn. R. 2860.4400 J).
• 95.8% limit general releases of Minnesota claims (Minn. R. 2860.4400 D).
• 88.4% limit the jury waiver, 81.1% restore the 3-year limitation period (Minn. Stat. 80C.17 subd. 5) and 66.0% say a franchisee cannot be required to consent to injunctive relief.

The same FDD therefore offers different terms to a Minnesota buyer than to a buyer in a state without a franchise relationship law. Minnesota’s rule still allows an exclusive arbitration clause (Minn. R. 2860.4400 J), so arbitration seats outside Minnesota generally survive the addendum.

What changed in 2024 to 2026

Two state laws now change these clauses directly. Virginia made it unlawful to offer or enter a franchise agreement that restricts the franchisee from the retail business after the agreement ends (Va. Code 13.1-563(A)(4)), allowing up to 2 years only when a franchisee sells the business (13.1-563(B)), and required Virginia law to govern (13.1-559(D)). The amendments were signed April 13, 2026 and took effect July 1, 2026 (DLA Piper, April 2026). 53 of the 101 sample FDDs issued on or after April 13, 2026 (52.5%) already cite the new Virginia provisions, and 68 of 259 do in total.

Maryland’s Chapter 414 took effect October 1, 2026. It gives franchisees a statutory right to join a franchisee association and changes the deadline for franchisee claims under Maryland’s disclosure law (Chapter 414, 2026 Laws of Maryland); a law-firm summary describes the new limit as the earlier of 4 years after the grant or 2 years after opening (Foley and Lardner, September 2026).

At the federal level, the FTC’s July 12, 2024 policy statement says franchise contracts may not restrict franchisees from reporting possible law violations to regulators (FTC policy statement); it was still listed in the FTC legal library with no withdrawal notice on October 6, 2026 (FTC legal library). The FTC’s Non-Compete Clause Rule never reached franchisee covenants: it excluded franchisees in the franchisor relationship, a court stopped it on August 20, 2024, and the FTC acceded to vacatur on September 5, 2025 (FTC rule page, FTC press release).

Discussion: what the angle got right and wrong

The planned angle mostly held, with two corrections. The 10-year term is the norm (65.6%), not a universal rule, and three sectors (lodging, automotive and business services) have medians other than 10 years. Arbitration or a fixed single-state court venue appears in 99.2% of FDDs, and the chosen state is the franchisor’s own in 96.5% of named court venues. The 2-year post-term non-compete with a set radius is the most common pattern, but it covers 64.5% of FDDs, so near universal overstates it; lodging FDDs carry no post-term covenant at all.

State addenda do soften terms, but only for buyers in those states. In this sample, a Minnesota buyer gets longer notice, a home forum for litigation and a 3-year claim window that buyers elsewhere may not. For a buyer comparing brands, Item 17 rows c, r, u, v and w are where these differences show up, and our guide to buying a franchise explains where they fit in the FDD review. Buyers working with a consultant can ask for these rows side by side; what a franchise consultant does explains that role.

Limitations

• The sample is 259 brands registered in Minnesota, capped per sector. Brands that do not register in Minnesota are absent, and sector caps mean pooled shares are not population estimates.
• Item 17 is a summary. Where it was silent or conflicted with the attached agreement, we recorded the agreement; renewal remodel, release and cross-default flags rely on Item 17 plus the reader’s check of the agreement and may undercount.
• Clause prevalence measures what is written, not what is enforced or negotiated. Many FDDs say a clause applies subject to state law.
• Hand check: 3 of 400 checked fields were wrong (0.8%) in a random 20-brand sample; the true error rate could be higher.
• Home state is the franchisor’s cover-page address, not the franchisee’s location, so the study cannot say how many franchisees must travel to another state.