What is the Annex Brands franchisee's obligation regarding participation in Fund programs?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
Franchisee understands and acknowledges that the Fund is intended to maximize general recognition and patronage of the Marks and Centers for the benefit of Franchisor and all Centers. Franchisee agrees to participate in all Fund programs. Franchisee has the right to set its own prices, except that Franchisee agrees to honor fully all coupons, price-reduction promotions and other promotions/programs as directed by Franchisor. Franchisor undertakes no obligation in developing, implementing, or administering marketing or public relations programs to ensure that expenditures which are proportionate or equivalent to contributions from Centers in any geographic area are made for that area. Franchisor assumes no direct or indirect liability or obligation to Franchisee with respect to the maintenance, direction, or administration of the Fund except as expressly provided in this Agreement.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to the 2025 FDD, Annex Brands franchisees are required to participate in all Fund programs. The purpose of the Fund is to increase recognition and customer traffic for the benefit of both Annex Brands and its franchise locations. While franchisees have the autonomy to set their own prices, they must honor all coupons, price-reduction promotions, and other promotional programs as directed by Annex Brands.
Annex Brands maintains and administers a marketing fund (the "Fund") for marketing activities that Annex Brands deems necessary or appropriate. Annex Brands directs all marketing and promotional programs of the Fund, with sole discretion over the creative concepts, materials, endorsements, and media used for the programs, the composition of all geographic territories and market areas for the development and implementation of programs, and the placement and allocation of all marketing. Any businesses owned by Annex Brands or any of its affiliates will contribute to the Fund on the same basis as Franchisee.
Annex Brands may establish a "Matching Funds Advertising Program," governed by rules in the manuals, where Advertising Associations to which a franchisee belongs can apply for funds. In addition to these potential matching funds, franchisees are expected to allocate additional funds for their own local marketing and advertising efforts. The Fund can cover various costs related to marketing materials, programs, public relations, and advertising across different media, including television, radio, print, digital platforms, and social media. The fund can also be used for franchise sales solicitation.
The Fund is accounted for separately from Annex Brands' other funds and will not be used for general operating expenses, except for reasonable salaries, administrative costs, and overhead related to the Fund's administration. Annex Brands will prepare an unaudited report of the Fund's operation annually, available to franchisees upon written request. Annex Brands may spend more or less than the aggregate contributions in any fiscal year, with any unspent funds rolling over to the next year. There will be no markup or profit to Annex Brands from the marketing, promotional programs, or the Fund's administration.