factual

What is the duration of the partial restriction under the alternative post-term non-competition covenant for Annex Brands franchisees?

Annex_Brands Franchise · 2025 FDD

Answer from 2025 FDD Document

As an alternative to Subsection 3(b)(iii) above, and only if the applicable former Center is located in a state whose public policy disfavors the enforceability of postterm non-competition covenants against franchisees, then on the Conclusion of the Franchise under the Franchise Agreement, 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 persons including but not limited to Covenantor's spouse if any, relatives, employees or business affiliates), 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 with, or is substantially similar to Franchisee's Center, and:

  • i. which sells packaging and shipping services (which constitute only a limited portion of all products and services sold by Franchisee's Center);

  • ii. which is located at the premises of Franchisee's Center; and

  • iii. with such partial restriction limited to a six (6) month period following the Conclusion of the Franchise under the Franchise Agreement.

  • d.

ABI may (in its sole discretion) at any time unilaterally reduce the scope of any part of the post-term non-competition covenant to something less than the restriction provided in Section 3 of this Agreement, and Covenantor agrees and promises to comply with any such reduced restriction on receipt of written notice from ABI.

Source: Item 22 — Contracts (FDD pages 109–110)

What This Means (2025 FDD)

According to Annex Brands' 2025 Franchise Disclosure Document, an alternative to the standard post-term non-competition covenant exists under specific conditions. This alternative applies only if the former Annex Brands center is located in a state where public policy disfavors the enforceability of standard post-term non-competition agreements against franchisees.

Under this alternative, the franchisee is restricted from engaging in a business that is the same as, or competes with, the former Annex Brands center. This restriction specifically applies to businesses that sell packaging and shipping services, which constitute only a limited portion of all products and services sold by the Annex Brands center. Additionally, this restriction applies only to businesses located at the premises of the former Annex Brands center.

The duration of this partial restriction is limited to six months following the conclusion of the franchise agreement. Annex Brands retains the right to unilaterally reduce the scope of any part of the post-term non-competition covenant to something less than the restriction provided in Section 3 of the agreement.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.