Does Annex Brands consider failure to pay national convention participation deposits as a breach?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
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Beginning after Franchisee (i) opens the Center, (ii) assumes the operation of an existing Center by transfer, or (iii) converts an existing business to a Center, Franchisor will collect from Franchisee as national convention participation deposits the sum of $25 per week each Tuesday after the close of business, for the previous week ending Saturday, by automatic draft from Franchisee's designated bank account. The amount, frequency, date and method of collection of the national convention participation deposits are subject to change in Franchisor's sole discretion, after at least 15 days' prior notice to Franchisee. National convention participation deposits will be applied to the per-person national convention registration fee and the national convention hotel fee for 1 room for the next scheduled national convention. If Franchisee's accrued national convention participation deposits are not sufficient to cover these fees, Franchisor has the right to debit Franchisee's bank account for the difference. If Franchisee and/or Franchisee's designated personnel attend the full program of, and stay at the designated hotel of, a national convention, any unused national convention participation deposits will remain with Franchisor as a credit toward the registration fee and the hotel fee for the next national convention unless, subject to Franchisor's approval in its sole discretion, the unused national convention participation deposits are applied towards or reimbursed for Franchisee's other expenses associated with the national
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, Annex Brands requires franchisees to make national convention participation deposits. These deposits are collected weekly via automatic drafts of $25 each Tuesday after the close of business for the previous week ending Saturday. The amount, frequency, date, and method of collection can be changed at Annex Brands' discretion with at least 15 days' prior notice.
These deposits are applied to the per-person national convention registration fee and the hotel fee for one room at the next scheduled national convention. If the accrued deposits are insufficient to cover these fees, Annex Brands can debit the franchisee's bank account for the difference. If a franchisee attends the full convention program and stays at the designated hotel, any unused deposits remain with Annex Brands as a credit toward the next convention, unless Annex Brands approves their use for other convention-related expenses or reimbursement.
The FDD does not explicitly state that failure to pay national convention participation deposits constitutes a breach of the franchise agreement. However, the document does state that Annex Brands is authorized to withdraw funds for fees and any other indebtedness, suggesting that non-payment could lead to further action. A prospective franchisee should clarify with Annex Brands whether failure to pay these deposits is considered a breach of contract and what the specific consequences of such a failure would be.