Where must a competing business be located to trigger the alternative post-term non-competition covenant for Annex Brands franchisees?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
As an alternative to Subsection 3(b)(iii) above, and only if the applicable former Center is located in a state whose public policy disfavors the enforceability of postterm non-competition covenants against franchisees, then on the Conclusion of the Franchise under the Franchise Agreement, in accordance with the time period and geographic restrictions set forth below, Covenantor will not directly or indirectly (such as through corporations or other entities controlled by Covenantor or by, through or in conjunction with, any other individual person or persons including but not limited to Covenantor's spouse if any, relatives, employees or business affiliates), own, maintain, engage in, be associated with, be employed by, advise, assist, invest in, be landlord to, franchise, make loans to, or have any interest in any business which is the same, competes with, or is substantially similar to Franchisee's Center, and:
i. which sells packaging and shipping services (which constitute only a limited portion of all products and services sold by Franchisee's Center);
ii. which is located at the premises of Franchisee's Center; and
iii. with such partial restriction limited to a six (6) month period following the Conclusion of the Franchise under the Franchise Agreement.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, the alternative post-term non-competition covenant is triggered if the competing business is located at the premises of the former Annex Brands franchise. This alternative covenant applies only if the former franchise is located in a state where post-term non-competition covenants are disfavored.
Under this alternative, the franchisee agrees not to engage in any business that competes with the former Annex Brands center. This restriction specifically applies to businesses selling packaging and shipping services, which constitute only a limited portion of the products and services offered by an Annex Brands center.
This alternative restriction is limited to a six-month period following the conclusion of the franchise agreement. This is a less restrictive covenant than the standard non-compete, which extends for two years and covers a 5-mile radius around the former franchise location. Prospective franchisees should be aware of the specific non-compete terms applicable in their state and understand the limitations on operating a competing business after leaving the Annex Brands system.