Does the Annex Brands franchise agreement confer any goodwill interest in the Marks upon the franchisee?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
A. OWNERSHIP AND GOODWILL OF MARKS. Franchisee acknowledges that it has no ownership interest whatsoever in or to the Marks, and that its right to use the Marks is derived solely from this Agreement and is limited to its conduct of business under and in compliance with this Agreement and all applicable standards, specifications and operating procedures periodically prescribed by Franchisor during the term of the Franchise. Any unauthorized use of the Marks by Franchisee will constitute a default of this Agreement and an
infringement of Franchisor's rights in and to the Marks. Franchisee acknowledges and agrees that its usage of the Marks and any goodwill established thereby will inure to the exclusive benefit of Franchisor, and that this Agreement does not confer any goodwill or other interest in the Marks upon Franchisee, other than the right to use the Mark in the operation of the Center in compliance with this Agreement. All provisions of this Agreement applicable to the Marks will apply to any additional trademarks, service marks, logos and other identifiers hereafter authorized for use by and licensed to Franchisee by Franchisor.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to the 2025 Annex Brands Franchise Disclosure Document, the franchise agreement does not confer any goodwill or other interest in the Marks upon the franchisee, other than the right to use the Marks in the operation of the Center in compliance with the agreement. Annex Brands retains exclusive ownership of the Marks, and any goodwill established through the franchisee's use of the Marks benefits Annex Brands. The franchisee acknowledges that they have no ownership interest in the Marks and that their right to use them is derived solely from the franchise agreement.
This means that while franchisees build a business using the Annex Brands name and associated trademarks, they do not gain any equity in those trademarks or the goodwill associated with them. The franchisee's right to use the Marks is contingent upon their adherence to the franchise agreement and the standards set by Annex Brands. Any unauthorized use of the Marks by the franchisee constitutes a breach of the agreement and an infringement of Annex Brands' rights.
Upon termination, expiration, or non-renewal of the franchise agreement, the franchisee must cease using the Marks and any related identifying features. This includes removing signs, decor, and advertising materials that display the Marks. The franchisee must also make necessary alterations to distinguish the former Center from other Annex Brands locations to prevent confusion. This ensures that the goodwill remains with Annex Brands and is not transferred to the franchisee's future endeavors.
This is a standard practice in franchising, as the franchisor needs to maintain control over its brand and ensure consistent quality across all locations. It protects the integrity and value of the brand for the benefit of the entire franchise system. Prospective franchisees should understand that building a successful Annex Brands franchise primarily benefits the franchisor's brand equity, even as it provides income for the franchisee during the term of the agreement.