Article 25 offers the parties the option of contracting for a definite period of time (25.1 A) or for an indefinite period of time (25.1.B). As regards contracts for a definite period of time it is common to provide a minimum period of five years. Franchisees shall ensure that a minimum period agreed upon secures return of investment.

A further important issue regards the conditions upon which the initial contract will be prolonged or renewed. In this regard, the AA clause provides for the automatic renewal of the contract, beyond the initial term, unless either party gives the other party proper notice of its intention to terminate the agreement. If a party does not want to continue the contract under the existing conditions it may terminate the contract and thereafter propose to negotiate possible changes.

If the franchisee wishes to be sure that the contract will be renewed if it meets certain requirements, parties may have recourse to alternative AB which gives the franchisee a one-sided option to obtain the continuation of the relationship provided certain conditions are met.

If the contract is entered into for an indefinite period of time, the parties should check whether the notice period provided is appropriate for their needs and complies with the provisions, if any, of the law governing the contract.

Alternative A: Contract for a definite period of time

25.1 A Subject to the provisions of Articles 26 and 27 below, the Contract shall commence as of the date of _____ (hereinafter referred to as the Effective Date) and continue in force for a term of ____ years (hereinafter referred to as the Initial Term).

A A30 This Contract shall be automatically renewed for successive periods of ___ years, un less terminated by either party by notice given in writing by means of communication ensuring evidence and date of receipt (e.g. registered mail with return receipt, special courier), not less than 9 months before the date of expiry.

A B Franchisor hereby grants Franchisee an option to enter into a new franchise Contract following the Initial Term pursuant to the following terms and conditions: (a) Franchisee has not committed a material breach of the Contract; (b) Franchisee must sign the standard Contract in effect at that time; and, (c) Franchisee has to call the option not less than 9 months prior to the expiration of the Initial Term.

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Alternative B: Contract for an indefinite period of time

25.1 B Subject to the provisions of Articles 26 and 27 below, this Contract shall commence as of the date of ______ (hereinafter referred to as the Effective Date) and continue for an indefinite period. This Contract may be terminated by either party by notice in writing by means of communication ensuring evidence and date of receipt (e.g., registered mail with return receipt, special courier) not less than 9 months in advance. The end of the period of notice must coincide with the end of a calendar month.

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Choose between the two sub-alternatives AA and AB which are applicable only if Article 25.1 A is applied.