What are the conditions under which Annex Brands may terminate a franchise agreement, considering the franchisee's obligations in Item 9?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
15. TERMINATION OF FRANCHISE BY FRANCHISOR
- A. TERMINATION WITHOUT OPPORTUNITY TO CURE. Franchisor may, in its sole discretion, terminate the Franchise, effective upon giving written notice of termination to Franchisee, if Franchisee or any of its owners:
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- has intentionally made any material misrepresentation or omission in connection with his, her or their application for the Franchise;
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- is convicted of or pleads no contest to a felony or other crime or offense that may adversely affect the reputation of Franchisee or the Center;
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- makes any unauthorized use or disclosure of any of the Confidential Information;
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- surrenders or transfers control of the operation of the Center, or breaches any of the provisions of Subsections 13.B, 13.D, 13.E or 13.G of this Agreement;
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- submits to Franchisor on 3 or more separate occasions at any time during the term of the Franchise granted under this Agreement any reports or other data, information or supporting records which understate by more than 5% the royalty fees or marketing fees for any period of 1 or more months;
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- knowingly and intentionally misuses or makes an unauthorized use of any Mark or commits any act which Franchisor in good faith believes may reasonably be expected to impair the goodwill associated with any Mark;
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- terminates or cancels, or allows the termination or cancellation of the lease or sublease of the Center, except as otherwise provided in Subsection 2.C of this Agreement;
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- fails to complete the full initial training program;
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- has been given 3 or more notices of breaches within any period of 12 consecutive months with respect to Franchisee's failure to:
- a) submit when due reports or other
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, Annex Brands has the authority to terminate a franchise agreement under specific conditions, some of which do not require an opportunity for the franchisee to correct the issue. These terminations are at Annex Brands' sole discretion and are effective immediately upon written notice..
Annex Brands may terminate the franchise agreement without an opportunity to cure if the franchisee intentionally makes a material misrepresentation or omission during the franchise application process. Termination can also occur if the franchisee is convicted of or pleads no contest to a felony or any crime that could negatively impact the franchisee's or the center's reputation. Unauthorized use or disclosure of confidential information, surrendering control of the center's operation, or breaching specific subsections of the agreement also constitute grounds for immediate termination.
Further, Annex Brands can terminate the agreement if the franchisee submits reports that understate royalty or marketing fees by more than 5% on three or more occasions, knowingly misuses Annex Brands' marks, or terminates the center's lease (with some exceptions). Finally, if a franchisee receives three or more notices of breaches within a 12-month period for failing to submit reports on time, Annex Brands can terminate the agreement without offering an opportunity to cure the breach.