What are the conditions under which Annex Brands may require franchisees to upgrade their equipment, considering the franchisee's obligations in Item 9?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
THE CENTER
A. CONDITION AND APPEARANCE OF THE CENTER. Franchisee agrees to maintain the condition and appearance of the Center consistent with the System and required uniform image of its franchised businesses as a modern, clean, attractive and efficiently operated Center, which offers high quality products to the public based on friendly, creative and efficient service. Franchisee agrees to perform or cause to be performed at Franchisee's expense whatever maintenance of the Center is required to maintain such condition, appearance, and efficient operation, including: continuous and thorough cleaning; periodic decoration and repair or remodeling, as necessary, of the interior and exterior of the Center; and replacement of worn-out or obsolete leasehold improvements, furnishings, fixtures, equipment, displays, signs, and graphics with approved leasehold improvements, furnishings, fixtures, equipment, displays, signs, and graphics. The Center must have new flooring, and the interior must be repainted to Franchisor's specifications at least once every 60 months. Any tile flooring must be cleaned daily and polished at least semi-annually, and any carpet flooring must be cleaned daily and dry-cleaned at least semi-annually, to Franchisor's specifications as necessary to maintain a clean appearance.
If Franchisee does not maintain the condition and appearance of the Center as is required by this Agreement, Franchisee will give Franchisor access to the Center on not less than 3 days' prior written notice from Franchisor, so that Franchisor may: 1) arrange for the necessary cleaning, repair, remodeling, upgrading, painting or decorating; and 2) replace the necessary leasehold improvements, furnishings, fixtures, equipment, displays, signs, or graphics. Franchisee must pay the entire cost thereof within 10 days of receipt of an invoice from Franchisor for the services or purchases. Franchisee's failure to give Franchisor access to the Center, or to reimburse Franchisor in accordance with this Subsection 9.A, is an act subject to the default and enforcement provisions of this Agreement.
No replacement of leasehold improvements, furnishings, equipment, displays, signs, or graphics will be made, nor will any material alteration to the Center as originally developed or approved by Franchisor be made, without Franchisor's prior written consent. Franchisee will place or display at and within the Center only such signs, logos, emblems, lettering, graphics, and display materials as are periodically approved or designated in writing by Franchisor. Franchisor may require any changes, replacements, or modifications not previously approved by Franchisor to be rectified at Franchisee's sole expense and Franchisee will promptly make any such changes, replacements or modifications.
B. AUTHORIZED PRODUCTS, EQUIPMENT, AND SERVICES. The presentation of a uniform image to the public and the resulting positive reputation and goodwill are essential elements of a successful franchise system. Franchisee therefore agrees that the Center will offer for sale such products, services, and will use those brands and models of equipment as Franchisor, in its sole discretion, periodically determines to be appropriate for Centers.
In determining approved brands and models of equipment, Franchisor may consider standards of quality, value, customer recognition and acceptance, advertising support and availability, and such other standards as are periodically determined by Franchisor to be relevant. Certain trade dress fixtures, equipment, supplies, other merchandise and services may be required to be purchased directly from Franchisor and/or its affiliates, or may be permitted to be purchased from other suppliers provided Franchisor is held harmless by Franchisee regarding any products liability cause of action. On items or services sold by Franchisor and/or its affiliates, Franchisor anticipates a reasonable profit to cover overhead expenses.
Franchisor may periodically publish a suggested price list for products and services offered at the Center. The purpose of such a list is for guidance only. Franchisee is not bound by these suggested prices and may offer products and services at prices determined at the sole discretion of Franchisee, except as otherwise noted in Subsections 9.J, 9.K, 10.A and 10.F of this Agreement.
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, franchisees are obligated to maintain their centers to meet the system's standards. This includes keeping the center modern, clean, attractive, and efficiently operated. Franchisees must perform necessary maintenance, including cleaning, periodic decoration, repairs, remodeling, and replacing worn-out or obsolete items like leasehold improvements, furnishings, fixtures, equipment, displays, signs, and graphics with approved replacements. Specifically, the interior must be repainted every 60 months, and flooring must be cleaned and polished or dry-cleaned regularly. If a franchisee fails to maintain the center's condition and appearance, Annex Brands can arrange for the necessary work and charge the franchisee for it, with failure to pay constituting a breach of the agreement.
Annex Brands maintains control over the products, services, and equipment used at the centers to ensure a uniform image. Franchisees must use equipment brands and models that Annex Brands periodically determines are appropriate. Annex Brands considers factors like quality, value, customer recognition, advertising support, and availability when approving equipment. Franchisees need prior written consent from Annex Brands for any replacements or material alterations to the center. Annex Brands can require franchisees to rectify unapproved changes or modifications at the franchisee's expense.
Furthermore, Annex Brands specifies that as computer technology evolves, they may require franchisees to upgrade or replace their computer systems. This includes adding memory, ports, accessories, peripheral equipment, or new software. Franchisees may eventually need to replace their entire computer systems to meet Annex Brands' specifications. These changes can be substantial and may occur during the franchise term. Franchisees are responsible for the costs associated with these upgrades, including hardware, software, licenses, and delivery costs. Franchisees must also grant Annex Brands access to their computer systems for data retrieval.