FDD Item 17 Explained: Renewal, Termination, and Exit

Item 17 is the part of a Franchise Disclosure Document that answers the question buyers ask last and should ask early: how hard is it to get out, and what happens if the relationship goes wrong. It is required by the FTC Franchise Rule at 16 CFR 436.5(q), and it takes the form of a table titled “THE FRANCHISE RELATIONSHIP” that summarizes and cross-references the franchise-agreement provisions on renewal, termination, transfer, non-competes, and dispute resolution.

Start with this: the table is a summary, not the contract. Each row points to the actual section of the franchise agreement, and that referenced language is the binding one. This guide walks through the exit terms row by row, and it is careful about one thing throughout: whether any of these clauses, a non-compete, a termination ground, an arbitration requirement, is enforceable is a legal question that turns on state law and specific facts. This article discloses what the terms are and the questions to raise; it does not, and cannot, tell you whether a clause will hold up. That is a conversation for a franchise attorney. The exit terms sit inside the broader guide to reading an FDD. Item 3 covers litigation disclosures, while Item 17 summarizes the exit terms; Item 22 points you to the proposed contracts containing the terms you would agree to when signing.

What is FDD Item 17?

(q) Item 17: Renewal, Termination, Transfer, and Dispute Resolution. Disclose, in the following tabular form, a table that cross-references each enumerated franchise relationship item with the applicable provision in the franchise or related agreement. Title the table “THE FRANCHISE RELATIONSHIP” in capital letters and bold type.

Source: 16 CFR 436.5(q), eCFR.

Item 17 is the exit and dispute disclosure, and it is structured as a table for a reason: it lets you scan the whole lifecycle of the relationship, from renewal through termination to what you owe when it ends. Under 16 CFR 436.5(q), each row gives a brief plain-language summary and, in the middle column, a cross-reference to the section of the franchise agreement that governs it.

Two reading habits make it useful. First, the summaries are not the contract. When a row matters to you, read the referenced agreement section, because that is the language a court or arbitrator would apply. Second, watch for “Not Applicable,” which means the agreement is silent on that item rather than that the item is favorable. The exit terms are the “what if it goes wrong” section of the entire FDD, and they are worth reading before the terms that describe the good years.

What real Item 17 terms look like (2026 FDDs)

These summaries cover the single-unit franchise or license agreement rows in five 2026 FDDs, not separate development agreements. Renewal remains subject to each FDD’s listed conditions; the examples below do not list every condition. Read the referenced agreement and applicable state addenda before relying on a term.

Brand	Initial term	Renewal	Right of first refusal on transfer?	Dispute venue / method
Freddy’s	15 years from restaurant opening	15-year renewal if requirements are met, including a remodel, fee, release, training and a new license agreement that may differ materially	Yes; can match any offer for any interest in the license agreement, restaurant or franchisee	Mediation, then arbitration in Wichita, Kansas, under AAA rules. Litigation in Wichita, Sedgwick County; Kansas law, subject to state law.
The Human Bean	10 years	10 years; $3,000 fee and then-current agreement, with compliance, notice and remodel requirements, plus a release if permitted by law	Yes; option to purchase before most transfers on the same terms	Mandatory binding arbitration except to prevent irreparable harm. Litigation and arbitration in Medford, Oregon; Oregon law, subject to applicable state law.
Robeks	10 years	Two successive 10-year options, subject to conditions including a then-current agreement; royalty and marketing fees remain the same	Yes; can match a third-party offer for the franchise, assets or controlling interest; 30 days to exercise	Mediation at franchisor offices, then arbitration in the headquarters city (currently Los Angeles), with exceptions for interim court relief. Such court claims go to courts covering the store or headquarters; store-state law governs, subject to applicable state law.
Playa Bowls	10 years	One additional 10-year term if conditions are met, including 180 days’ written notice, then-current agreement, release, fee and shop upgrades	Yes; can match any offer for the shop or its operating corporate entity	Except certain injunctive claims, non-binding mediation, then binding arbitration in Monmouth County, New Jersey, or the nearest suitable location to headquarters, chosen by the mediator or arbitrator. With the same injunctive-relief exception, litigation in courts within or closest to Monmouth County or nearest headquarters. New Jersey law; subject to state law and Exhibit I.
Firehouse Subs	Typically 10 years from the franchise agreement date	One 10-year renewal, subject to conditions including a then-current agreement that may materially change ownership requirements, royalties or system fund contributions	Yes; can match any offer	Arbitration/mediation: Not applicable. Litigation in state or federal court in the state and judicial district of the principal place of business (currently Duval County, Florida); Florida law generally applies, subject to state law.

Sources: Freddy’s FDD, issued April 30, 2026; The Human Bean FDD, issued February 25, 2026, as amended May 5, 2026; Robeks FDD, issued April 17, 2026; Playa Bowls FDD, issued April 30, 2026; Firehouse Subs FDD, issued March 25, 2026. Each source is Item 17. The hosted filenames end in 2025.pdf; the dates above are the issuance dates printed inside the documents.

Can you get out of a franchise early?

This is the row that surprises first-time buyers most, so read it directly. Compare the “Termination by franchisee” row against the “Termination by franchisor” rows, which usually split into termination with cause and without cause. In many systems the franchisee row says “None,” which means the agreement gives you no built-in right to walk away before the term ends. The FTC’s Consumer’s Guide notes that a franchisee who closes early may keep owing royalties for the remaining term of the agreement.

Then read the default provisions carefully. Curable defaults come with a cure period, a window to fix the problem before the franchisor can terminate. Non-curable defaults allow termination with no chance to fix, and the list of what counts as non-curable is worth knowing before you sign. The table below shows the scenarios to line up; the specific agreement controls, so confirm each against your Item 17.

Use Item 9’s records, reports and audit references to locate those duties in the agreement, then read them alongside the default and cure provisions summarized in Item 17.

If a default involves failure to follow operating rules, our guide to franchise brand standards explains where those standards may appear.

Termination scenario	What to check
Termination by franchisee	Whether any right exists, or the row says “None”
Termination by franchisor, with cause	The grounds, and whether a cure period applies
Termination by franchisor, without cause	Whether it exists, and on what notice
Curable default	The length of the cure period
Non-curable default	What counts, and that no cure is allowed

Does renewal mean the same terms?

Renewal is one of the most misread rows, because “renewal” sounds like a continuation of the deal you signed, and it often is not. There is no right to renew unless the franchisor grants one. Under 16 CFR 436.5(q)(3), the summary for the franchisee’s renewal requirements must state what renewal means in that system, and if applicable, it must warn that you may be required to sign a then-current franchise agreement whose terms, including fees, territory, and obligations, can differ materially from your original.

So read renewal as a fresh negotiation on the franchisor’s current terms rather than a guaranteed extension. Pair it with the fees you know from Item 5 and Item 6, because a renewal on a then-current agreement can carry a higher royalty or a renewal fee that did not exist when you started.

Non-competes, transfers, and getting your value out

Two clusters of Item 17 terms decide whether you can capture the value you build. The non-compete covenants appear in two forms: an in-term covenant that restricts what you can do while you operate, and a post-term covenant that restricts you after the relationship ends, typically by duration, radius, and a definition of “competing business.” The transfer terms cover the conditions under which the franchisor must approve a sale, any right of first refusal that lets the franchisor match a buyer’s offer, and any option for the franchisor to purchase your business. Item 20 adds the system’s outlet transfers, closures, and franchisee contact lists.

Here the enforceability question is sharpest, and it stays a question. Whether a post-term non-compete is enforceable depends on state law and the specific facts, and it varies widely by state. As of October 13, 2026, the FTC’s Noncompete Rule page says the rule ‘is not in effect and it is not enforceable’; a district court stopped enforcement on August 20, 2024, and the FTC took steps on September 5, 2025 to dismiss its appeal. State law governs franchise non-competes. (FTC Noncompete Rule status). That is background, not advice: it does not mean your non-compete will or will not apply. Ask a franchise attorney in the state where you would operate. To pressure-test the whole set of exit terms clause by clause, run them through our franchise agreement red flags checklist, and ask owners who have left about their experience using our questions to ask current and former franchisees.

Before planning a sale, review the franchise transfer fee, the right of first refusal, the transfer approval process, and the conditions for release of your personal guarantee; succession planning also calls for checking what happens when a franchise owner dies.

Dispute resolution: where, and under whose law?

The final Item 17 rows decide how and where a fight gets resolved, and they are easy to skim and expensive to ignore. The disclosures cover dispute resolution by mediation or arbitration, the choice of forum, and the choice of law. Many franchise agreements require arbitration, and specify the franchisor’s home state as both the venue and the governing law.

The practical effect of those clauses is real: they can mean traveling to another state to bring a claim, and they can include waivers worth understanding, such as jury-trial or class-action waivers. They can also interact with a state franchise-relationship statute that provides good-cause protections. Whether any of these provisions is enforceable, and how it interacts with your state’s law, is a legal question for your attorney rather than something to judge from the summary.

Questions to ask your franchise attorney about Item 17

Item 17 is the item where enforceability questions belong squarely with a lawyer. Bring these rather than reaching a conclusion yourself.

• Is the post-term non-compete enforceable in the state where you would operate, and how broad are its duration, radius, and “competing business” definition?
• Do any non-curable defaults allow immediate termination, and what conduct counts?
• If you closed early, could you be liable for royalties or liquidated damages for the remaining term?
• Do the arbitration, forum, or choice-of-law clauses waive rights or override a state good-cause statute?
• Can the “modification of the agreement” row let the franchisor change the operating manual to add fees, in light of the FTC’s July 2024 staff guidance on undisclosed fees?

Take the exit-terms checklist to your attorney

Our free agreement red-flags checklist covers renewal conditions, termination triggers, right of first refusal, non-competes and venue clauses. Plus the due-diligence kit.

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