Must an Annex Brands franchisee be in full compliance with all agreements to have a transfer approved?

According to Annex Brands' 2025 Franchise Disclosure Document, a franchisee must be in full compliance with all agreements to have a transfer approved. Specifically, if the franchisee and its owners are in full compliance with the Franchise Agreement and all other agreements between the franchisee and Annex Brands or its affiliates, Annex Brands will not unreasonably withhold approval of a requested transfer that meets all applicable requirements. This condition ensures that the franchisee has met all obligations to Annex Brands before transferring ownership.

This requirement means that a prospective Annex Brands franchisee needs to maintain good standing with the franchisor throughout the term of their agreement. Any breaches or defaults could prevent the franchisee from selling or transferring the franchise to a new owner. This could affect the franchisee's ability to recoup their investment when they decide to exit the business.

For a potential buyer, this underscores the importance of due diligence. The buyer should verify with Annex Brands that the seller is in full compliance with all agreements. This verification protects the buyer from inheriting any unresolved issues or liabilities. The FDD also states that the proposed transferee must meet Annex Brands' standards for franchisees, including demonstrating good moral character.

Overall, this provision protects Annex Brands by ensuring that franchisees meet their contractual obligations and that any new franchisees also meet the franchisor's standards. Franchisees should maintain meticulous records and open communication with Annex Brands to ensure compliance and facilitate a smooth transfer process when the time comes.