What constitutes the 'Conclusion' of a franchise under the Annex Brands Franchise Agreement for the purposes of post-term covenants?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
- a. For purposes of this Section 3, the word "Conclusion" means the expiration, termination, non-renewal or transfer of the Franchise under the Franchise Agreement, regardless of whether such expiration, termination, non-renewal or transfer occurs prior to, or at the end of, the Franchise's term.
- b. Upon the Conclusion of the Franchise under the Franchise Agreement, and in accordance with the time period and geographic restrictions set forth below, Covenantor will not directly or indirectly (such as through corporations or other entities controlled by Covenantor or by, through or in conjunction with, any other individual person or person, including but not limited to Covenantor's spouse if any, relatives, employees or business affiliates):
- i. divert or attempt to divert any business or customer of any Retail Center or Commercial Logistics Center to any competitor, or do anything injurious or prejudicial to the goodwill associated with ABI's Marks or System for a two
(2) year period following the Conclusion of the Franchise under the Franchise Agreement and without geographic restriction;
ii. own, maintain, engage in, be associated with, be employed by, advise, assist, invest in, be landlord to, franchise, make loans to, or have any interest in any business which is the same, competes, or is substantially similar to, Franchisee's Center or any Retail Center or Commercial Logistics Center, which is located within 5 miles of Franchisee's Center or any Retail Center or Commercial Logistics Center in operation or under construction as of the Conclusion of the Franchise under the Franchise Agreement (with such restriction limited to a two (2) year period following the Conclusion of the Franchise under the Franchise Agreement); and/or
iii. enter into any business relationship with any terminated (former) Corporate Account(s) of any Retail Center or Commercial Logistics Center for a one (1) year period following ABI's termination of any of its Corporate Accounts.
c.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, the "Conclusion" of a franchise, which triggers post-term non-competition and non-solicitation covenants, is defined as the expiration, termination, non-renewal, or transfer of the Franchise Agreement. This definition applies regardless of whether these events occur before or at the end of the franchise term. This is important for prospective franchisees to understand because it clarifies when the restrictions on their activities after leaving the Annex Brands system will begin.
Specifically, upon the Conclusion of the Franchise, the franchisee (referred to as "Covenantor") is subject to certain restrictions. For a two-year period, the franchisee cannot divert business from any Retail Center or Commercial Logistics Center, harm the goodwill associated with Annex Brands' marks, or operate a similar business within 5 miles of their former location or any other Annex Brands location. Additionally, for one year, they cannot engage in business relationships with terminated Corporate Accounts of any Retail Center or Commercial Logistics Center.
These post-term covenants are standard in franchising to protect the brand and its franchisees from unfair competition by former franchisees who have gained knowledge and experience within the system. However, the specific terms, such as the duration and geographic scope, can vary significantly between franchise systems. Annex Brands also retains the right to unilaterally reduce the scope of any part of the post-term non-competition covenant, providing some flexibility. Franchisees should carefully consider these restrictions and how they might impact their future business opportunities before investing in an Annex Brands franchise.