What aggregate expense threshold must be exceeded before changes to the Annex Brands system are deemed materially and unreasonably increasing the franchisee's obligations?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
the Marks. Subject to the other provisions of this Agreement, Franchisee expressly agrees to abide by any such modifications, additions, deletions, alterations, and other changes; provided, however, that such changes do not materially and unreasonably increase Franchisee's obligations hereunder, it being understood and agreed that no aggregate expense(s) during the term of the Franchise granted under this Agreement less than or equal to $80,000 will be deemed material and/or u
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to the 2025 FDD, Annex Brands franchisees are expected to adapt to changes in the system, but there's a limit to how much these changes can cost them. Specifically, Annex Brands states that changes to the system will not be considered a material and unreasonable increase to the franchisee's obligations if the aggregate expenses during the franchise term are less than or equal to $80,000.
This means that if Annex Brands introduces new requirements or modifications to the system that require the franchisee to spend money, the franchisee cannot claim that these changes are materially and unreasonably increasing their obligations unless the total cost of all such changes exceeds $80,000 over the entire term of the franchise agreement. This provides a degree of certainty for the franchisee, as they know that they are expected to invest in the evolution of the Annex Brands system, but they also have a cap on how much they can be required to spend.
It is important for prospective Annex Brands franchisees to understand what types of changes might trigger these expenses. For example, changes to computer systems, required equipment upgrades, or new marketing initiatives could all contribute to the aggregate expense. Franchisees should also clarify with Annex Brands what types of expenses are included in this calculation and what documentation is required to track these expenses over time. This will help them manage their investment and ensure they remain within the agreed-upon limits.