For Annex Brands, what is the effect of a transfer when a new franchise agreement is entered into with the transferee?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
A transfer has the effect of superseding the previous franchise agreement, when a new franchise agreement is entered into with the transferee.
A consequence of entering into a new franchise agreement is that a new Protected Area described in Attachment 3 will be granted to the transferee and this new Protected Area may be smaller in size than the original Protected Area.
Franchisee should not represent to transferee that transferee will be granted the original Protected Area.
There may be other changes, such as changed fee, payment, operational and reporting requirements.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, when a new franchise agreement is created with a transferee, the transfer supersedes the previous franchise agreement. This means the original agreement is no longer in effect, and the transferee operates under the terms of the new agreement.
One significant consequence for the transferee is that they will be granted a new Protected Area, which may be smaller than the original Protected Area granted to the initial franchisee. Annex Brands explicitly states that the franchisee should not represent to the transferee that they will receive the original Protected Area. This could impact the transferee's business potential if the area is smaller and has less market opportunity.
Additionally, the new franchise agreement may include other changes, such as different fees, payment schedules, operational requirements, and reporting obligations. Prospective transferees should carefully review the new franchise agreement to understand all the changes and how they might affect their investment and business operations. This is a common practice in franchising, as franchisors often update their agreements to reflect changes in the market, legal requirements, or the franchise system itself.