Does Annex Brands consider failure to pay late fees as a breach?

Based on the 2025 Franchise Disclosure Document, Annex Brands outlines the consequences of failing to pay fees when due. Specifically, if a franchisee fails to pay any royalty fees, marketing fees, national convention participation deposits, technology services fees, insurance premiums, or other fees, Annex Brands has the right to charge a late fee. This late fee is the greater of $35 or 10% of the amount due, or the highest late fee allowed by law. Additionally, Annex Brands can charge 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.

While the FDD details the penalties for late payments, it does not explicitly state that failure to pay late fees constitutes a breach of the franchise agreement. However, the agreement does state that failure 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.

It is important for prospective franchisees to understand the payment terms and potential penalties for late payments. While the FDD does not explicitly define non-payment of late fees as a breach, the accumulation of unpaid fees and late charges could potentially lead to further action by Annex Brands, including potential termination of the franchise agreement. A prospective franchisee should clarify with Annex Brands the specific circumstances under which failure to pay late fees or other indebtedness would be considered a breach of contract.