What is the consequence if an Annex Brands franchisee fails to pay insurance premiums when due?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
; INTEREST. If Franchisee fails to pay when due any royalty fees, marketing fees, national convention participation deposits, technology services fees, insurance premiums, or other fees under this Agreement and all other agreements between Franchisee and
Franchisor and its affiliates, expenses, equipment lease or rental payments and/or supplies payments, purchases from Franchisor and/or its affiliates, or any other indebtedness to Franchisor or its affiliates, Franchisor may charge Franchisee a late fee of the greater of $35 or 10% of the amount due (or the highest late fee allowed by law), plus interest at the rate of 1.5% per month (or the highest interest allowed by law) from the date that the payment was originally due until the date of payment. Franchisee must authorize payment by electronic funds transfer.
G. GROSS RECEIPTS. "Gross Receipts" means the total of all sales of products and services to customers of the Center, whether or not sold or performed at or from the Center, excluding: (i) sales, use or service taxes collected and paid to appropriate taxing authorities; (ii) customer refunds and adjustments; (iii) the cost of electronic funds transfers for resale; (iv) the cost of money orders for resale; (v) utility funds collected;
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to the 2025 FDD, if an Annex Brands franchisee fails to pay insurance premiums when due, several consequences may arise. Annex Brands, at its discretion, can obtain insurance coverage on behalf of the franchisee if the franchisee fails to maintain the required insurance. The franchisee is responsible for cooperating with Annex Brands in obtaining this insurance and must promptly pay the premiums or reimburse Annex Brands for any costs incurred.
Additionally, Annex Brands may charge a late fee of either $35 or 10% of the amount due, whichever is greater (or the highest late fee allowed by law), along with interest at a rate of 1.5% per month (or the highest interest allowed by law) from the original due date until the payment is made. The franchisee is obligated to authorize payments via electronic funds transfer.
Furthermore, failure to purchase or maintain the required insurance, or failure to reimburse Annex Brands for insurance purchased on the franchisee's behalf, constitutes a material default of the Franchise Agreement. Unless waived by Annex Brands, this default can lead to the termination of the franchise, in accordance with Subsection 15.B of the agreement. Franchisees must also participate in any franchisor-sponsored transit insurance programs and pay all premiums assessed for such programs in a timely manner.