In an Annex Brands franchise transfer, what non-competition covenant must the franchisee or transferring owner execute?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Franchisee (if transferring), or any transferring owner, must execute a non-competition covenant in substantially the form of the Non-Competition and Non-Solicitation Agreement (Attachment 11) in favor of Franchisor and the transferee agreeing, for not less than a continuous 2 year period after the transfer, not to have any interest, either directly or indirectly, or through an Immediate Family Member, as an employee, manager, consultant, operator, lender, investor, financier, representative, disclosed or beneficial owner, part owner, proprietor, partner, principal, officer, director, co-venturer, stockholder (except as the owner of securities listed on a stock exchange or traded on the over-the-counter market that represent 5% or less of that class of securities), member, agent, participant or in any other capacity, in a business that offers business support, mailbox rental (physical and virtual), package receiving, postal, printing and copying (including digital printing and copying), digital transfer, offset printing, large-format printing, binding, finishing, personalized mailing, direct mail, packaging, crating, pick-up and
delivery, palletizing, freight, shipping, office supply, boxes and packaging materials, notary or fingerprinting products or services, or related products or services ("competitive business"), that is located within a radius of not less than 5 miles of: a) the Center or b) any Center in operation or under construction on the effective date of the transfer.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to the 2025 Annex Brands Franchise Disclosure Document, a franchisee or transferring owner must execute a non-competition covenant when transferring their franchise. This covenant, in favor of both Annex Brands and the new transferee, restricts the transferring owner from engaging in any competitive business within a specified area for a set period. Specifically, the transferring owner agrees not to have any interest in a business offering business support, mailbox rental (physical and virtual), package receiving, postal, printing and copying (including digital printing and copying), digital transfer, offset printing, large-format printing, binding, finishing, personalized mailing, direct mail, packaging, crating, pick-up and delivery, palletizing, freight, shipping, office supply, boxes and packaging materials, notary or fingerprinting products or services, or related products or services.
The non-compete restriction applies for a minimum of two years following the transfer. During this period, the transferring owner is prohibited from involvement in a competitive business within a 5-mile radius of either the transferred Annex Brands center or any other Annex Brands center in operation or under construction at the time of the transfer. This restriction extends to various forms of involvement, including being an employee, manager, consultant, operator, lender, investor, or owner, whether directly or indirectly, or through an immediate family member.
It is important to note that this non-competition covenant is in substantially the form of the Non-Competition and Non-Solicitation Agreement (Attachment 11) as outlined in the FDD. However, an exception exists for ownership of less than 5% of the equity securities of a publicly held corporation. Franchisees should carefully review Attachment 11 and consult with legal counsel to fully understand the scope and implications of this non-competition covenant before transferring their Annex Brands franchise.