In an Annex Brands franchise transfer, what must the Franchisee or transferee do if the Franchisee utilizes the services of any of Franchisor's sales consultants?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
ifications.
-
- If Franchisee utilizes the services of any of Franchisor's sales consultants (including outside agencies and brokers) to complete any transfer, prior to the transfer, Franchisee or the transferee must reimburse Franchisor an amount equal to any commission or other sales compensation that Franchisor must pay to such person(s).
-
- If Franchisee has any deposits with Franchisor, Franchisor will transfer all of the deposits to transferee's account as of the transfer closing date.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to the 2025 FDD, if an Annex Brands franchisee utilizes the services of any of the franchisor's sales consultants to complete a transfer, either the franchisee or the transferee is responsible for reimbursing Annex Brands. This reimbursement must occur prior to the transfer and must be in an amount equal to any commission or other sales compensation that Annex Brands is obligated to pay to those sales consultants.
This condition ensures that Annex Brands is compensated for the costs associated with using their sales consultants during the transfer process. It is common in franchising for the seller to cover these costs, but the agreement allows for flexibility as the franchisee and transferee can negotiate who ultimately bears this expense.
Specifically, the FDD notes that the franchisee may negotiate with the transferee for reimbursement through the Escrow Agent at the closing, which would adjust the sale price accordingly. This provides an opportunity for the parties to agree on the allocation of this cost during the transfer negotiations.