Does the Annex Brands franchise agreement allow for transfers of the Center's assets?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
its owners. Accordingly, without the prior written approval of Franchisor, the Franchise (or any interest in the Franchise), this Agreement (or any interest in this Agreement), the Center (or any interest in the Center), or the assets of the Center that are not purchased for resale (or any interest in such assets), may not be voluntarily, involuntarily, directly or indirectly, assigned, sold or otherwise transferred by Franchisee or any owner of Franchisee. Any such assignment, sale or other transfer without Franchisor's approval is a default of this Agreement and conveys no rights to or interests in the Franchise, this Agreement, the Center or the assets of the Center that are not assets purchased for resale, or Franchisee. Assignments, sales or other transfers subject to the foregoing restriction include, without limitation, the following:
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- sale, gift or other transfer of capital stock, or of a partnership, LLC or other ownership interest, in Franchisee;
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- merger or consolidation of Franchisee with another corporation, or issuance of capital stock, partnership, LLC or other ownership interests in Franchisee;
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- transfer of any rights under this Agreement, any capital stock, partnership, LLC or other ownership interest in Franchisee, or any interest in the Center, in a divorce proceeding or otherwise by operation of law; and
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- transfer of any rights under this Agreement, any capital stock, partnership, LLC or other ownership interest in Franchisee, or any interest in the Center, in the event of the death of Franchisee, or any shareholder, partner, member or other owner of Franchisee, by will, declaration of or transfer in trust, or under the laws of intestate succession.
- C. CONDITIONS FOR FRANCHISOR APPROVAL OF TRANSFER BY FRANCHISEE. If Franchisee and its owners are in full compliance with this Agreement and all other agreements between Franchisee and Franchisor or any of its affiliates, Franchisor will not unreasonably withhold its approval of a requested transfer that meets all the applicable requirements of this Subsection 13.C. The proposed transferee or its owners must be individuals of good moral character and otherwise meet Franchisor's then-applicable standards for franchisees. If the transfer is of a controlling interest in Franchisee, or is one of a series of transfers that in the aggregate constitute the transfer of a controlling interest in Franchisee, all of the following conditions must be met prior to, or concurrently with, the effective date of the transfer:
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- The transferee, including all its officers, directors or partners will jointly and severally execute the then-current franchise agreement and other standard ancillary agreements thereby agreeing to be bound by all the terms and conditions of those agreement(s) (except that no additional initial franchise fee will be charged). 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's 2025 Franchise Disclosure Document, franchisees are generally restricted from transferring the assets of their Center without prior written approval from Annex Brands. Specifically, the franchisee cannot voluntarily, involuntarily, directly, or indirectly assign, sell, or otherwise transfer the Center's assets that are not purchased for resale without approval from Annex Brands. This restriction applies to any interest in such assets. Any transfer without Annex Brands's approval constitutes a default of the Franchise Agreement and conveys no rights to the transferee.
This requirement ensures that Annex Brands maintains control over who operates a Center and uses its trademarks and systems. The franchisor wants to ensure that any new operator meets their standards and is capable of maintaining the brand's reputation. This approval process allows Annex Brands to vet potential transferees and ensure they are a good fit for the franchise system.
There are specific conditions related to the transfer. The franchisee must settle all outstanding payments, including royalty fees, marketing fees, and any other debts owed to Annex Brands or its affiliates. Additionally, the lessor of the Center must consent to the assignment or sublease of the Center to the transferee, if required by the lease terms. The franchisee or transferee is also required to pay a transfer fee of 15% of the then-current non-discounted initial franchise fee for a standard Center, although a 25% discount applies if the franchisee or transferee qualifies for the International Franchise Association's VetFran Program. Furthermore, both the franchisee and its owners must execute general releases of claims against Annex Brands.
It is important to note that even with a transfer, the original franchisee remains obligated under the Franchise Agreement unless Annex Brands provides a specific written release. 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.