In an Annex Brands franchise transfer, what happens to any deposits the Franchisee has with the Franchisor?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
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- If Franchisee has any deposits with Franchisor, Franchisor will transfer all of the deposits to transferee's account as of the transfer closing date.
The Franchisee may negotiate with the transferee that the amount be reimbursed to Franchisee by transferee through the Escrow Agent at the closing as an adjustment to the sales price.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, if a franchisee has any deposits with Annex Brands, these deposits will be transferred to the transferee's account as of the transfer closing date. The franchisee can negotiate with the transferee for reimbursement of this amount through the Escrow Agent at closing as an adjustment to the sales price.
This means that when a franchisee sells their Annex Brands franchise, any deposits they have with the franchisor, such as those for national convention participation or advertising, are not returned to them directly by Annex Brands. Instead, these deposits are transferred to the new franchisee taking over the business.
It is then up to the selling franchisee to negotiate with the buyer to be reimbursed for the value of these deposits. This reimbursement would typically be handled through the closing process, potentially as an adjustment to the overall sale price of the franchise. This arrangement allows for a smooth transition of funds and responsibilities between the parties involved in the transfer.