For Annex Brands franchises, what effect do statements, questionnaires, or acknowledgments signed by a franchisee have on waiving claims under state franchise law, including fraud in the inducement?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
Investment Act.
- (2) The franchise agreement and any document signed in connection with the franchise are supplemented with the following language:
- No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement by any franchisor, franchise seller, or other person acting on behalf of franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
VIRGINIA STATE ADDENDUM TO DISCLOSURE DOCUMENT
(1) Item 17(h) is amended to include the following paragraph:
Under Section 13.1-565 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the franchise agreement do not constitute "reasonable cause," as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable.
(2) The franchise agreement and any document signed in connection with the franchise are supplemented with the following language:
WASHINGTON STATE ADDENDUM TO DISCLOSURE DOCUMENT
(1) Item 3 of this disclosure document is modified to include the following disclosure:
Annex Brands, Inc. Assurance of Discontinuance, Matter No. 19-2-26209-5 SEA, State of Washington, King County Superior Court. On October 7, 2019, we entered into an Assurance of Discontinuance ("AOD") with the State of Washington Office of Attorney General ("OAG"). The OAG had investigated us, as it is investigating all franchisors with State of Washington registrations, regarding the inclusion by franchisors of no-poaching provisions in their franchise agreements and the enforcement by franchisors of those provisions. No-poaching provisions in franchise agreements restrict franchisees from soliciting or hiring workers from the franchisor or other franchisees. The OAG alleges that no-poaching provisions are in restraint of trade and violate the State of Washington Consumer Protection Act. Before the OAG investigated us, we had voluntarily removed nopoaching provisions from our franchise agreements, and we had not enforced those provisions. Nevertheless, to avoid protracted and expensive litigation, and while expressly denying any violation of law, we entered into the AOD, which required us to: (a) refrain from including no-poaching provisions in future franchise agreements nationwide; (b) refrain from enforcing no-poaching provisions nationwide; (c) notify our franchisees of the AOD; (d) seek to amend all then-existing franchise agreements in the State of Washington to remove any no-poaching provisions; and (e) remove no-poaching provisions in thenexisting franchise agreements nationwide as they are renewed or renegotiated. We complied with, and are complying with, the AOD.
- (2) In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act, Chapter 19.100 RCW will prevail.
- (3) RCW 19.100.180 may supersede the Franchise Agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise. There may also be court decisions which may supersede the Franchise Agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise.
- (4) In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a franchisee may bring an action or proceeding arising out of or in connection with the sale of franchise, or a violation of the Washington Franchise Investment Protection Act, in Washington.
- (5) A release or waiver of rights executed by a franchisee may not include rights under the Washington Franchise Investment Protection Act or any rule or order thereunder except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent legal counsel. Provisions such as those which unreasonably restrict or limit the statute of limitations period for claims under the Act, or rights or remedies under the Act such as a right to a jury trial, may not be enforceable.
- (6) Transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer.
- (7) Pursuant to RCW 49.62.020, a noncompetition covenant is void and unenforceable against an employee, including an employee of a franchisee, unless the employee's earnings from the party seeking enforcement, when annualized, exceed $100,000 per year (an amount that will be adjusted annually for inflation). In addition, a noncompetition covenant is void and unenforceable against an independent contractor of a franchisee under RCW 49.62.030 unless the independent contractor's earnings from the party seeking enforcement, when annualized, exceed $250,000 per year (an amount that will be adjusted annually for inflation). As a result, any provisions contained in the franchise agreement or elsewhere that conflict with these limitations are void and unenforceable in Washington.
- (8) RCW 49.62.060 prohibits a franchisor from restricting, restraining, or prohibiting a franchisee from (i) soliciting or hiring any employee of a franchisee of the same franchisor or (ii) soliciting or hiring any employee of the franchisor. As a result, any such provisions contained in the franchise agreement or elsewhere are void and unenforceable in Washington.
- (9) The franchise agreement and any document signed in connection with the franchise are supplemented with the following language:
STATE ADDENDUM TO DISCLOSURE DOCUMENT FOR INDIANA, MICHIGAN, SOUTH DAKOTA, AND WISCONSIN
The franchise agreement and any document signed in connection with the franchise are supplemented with the following language:
EXHIBIT A
AGENCIES/AGENTS FOR SERVICE OF PROCESS
This list includes the names, addresses and telephone numbers of state agencies having responsibility for enforcing franchise disclosure/registration laws, and state agencies serving as our agents for service of process if we are registered under the franchise disclosure/registration laws of their states.
In states and territories not listed, we do not have agents for service of process under franchise disclosure/registration laws, but we may have agents for service of process for other purposes.
| State | State Agency | Agent for Service of Process | |------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------| | CALIFORNIA | Department of Financial Protection and Innovation 320 West 4th Street, Suite 750 Los Angeles, CA 90013 (866) 275-2677 71 Stevenson Street, Suite 2100 San Francisco, CA 94105 | Commissioner of the Department of Financial Protection and Innovation | | HAWAII | (415) 972-8577 Business Registration Division Department of Commerce and Consumer Affairs 335 Merchant Street, Room 203 Honolulu, HI 96813 (808) 586-2722 | Commissioner of Securities of the State of Hawaii | | ILLINOIS | Office of Attorney General Franchise Division 500 South Second Street Springfield, IL 62706 (217) 782-4465 | Illinois Attorney General | | INDIANA | Indiana Secretary of State Securities Division 302 West Washington St., Room E-111 Indianapolis, IN 46204 (317) 232-6681 | Indiana Secretary of State 201 State House Indianapolis, IN 46204 | | MARYLAND | Office of the Attorney General Division of Securities 200 St. Paul Place Baltimore, MD 21202-2020 (410) 576-6360 | Maryland Securities Commissioner 200 St. Paul Place Baltimore, MD 21202-2020 (410) 576-6360 | | MICHIGAN | Michigan Department of Attorney General Consumer Protection Division Antitrust and Franchise Unit 670 Law Building Lansing, MI 48913 (517) 373-7117 | Michigan Department of Commerce, Corporations and Securities Bureau | | MINNESOTA | Minnesota Department of Commerce 85 7th Place East, Suite 280 St. Paul, MN 55101-2198 (651) 539-1500 | Minnesota Commissioner of Commerce |
| State | State Agency | Agent for Service of Process | |
|---|---|---|---|
| CALIFORNIA | Department of Financial Protection and Innovation 320 West 4th Street, Suite 750 Los Angeles, CA 90013 (866) 275-2677 71 Stevenson Street, Suite 2100 San Francisco, CA 94105 (415) 972-8577 | Commissioner of the Department of Financial Protection and Innovation | |
| HAWAII | Business Registration Division Department of Commerce and Consumer Affairs 335 Merchant Street, Room 203 Honolulu, HI 96813 (808) 586-2722 | Commissioner of Securities of the State of Hawaii | |
| ILLINOIS | Office of Attorney General Franchise Division 500 South Second Street Springfield, IL 62706 (217) 782-4465 | Illinois Attorney General | |
| INDIANA | Indiana Secretary of State Securities Division 302 West Washington St., Room E-111 Indianapolis, IN 46204 (317) 232-6681 | Indiana Secretary of State 201 State House Indianapolis, IN 46204 | |
| MARYLAND | Office of the Attorney General Division of Securities 200 St. Paul Place Baltimore, MD 21202-2020 (410) 576-6360 | Maryland Securities Commissioner 200 St. Paul Place Baltimore, MD 21202-2020 (410) 576-6360 | |
| MICHIGAN | Michigan Department of Attorney General Consumer Protection Division Antitrust and Franchise Unit 670 Law Building Lansing, MI 48913 (517) 373-7117 | Michigan Department of Commerce, Corporations and Securities Bureau | |
| MINNESOTA | Minnesota Department of Commerce 85 7th Place East, Suite 280 St. Paul, MN 55101-2198 (651) 539-1500 | Minnesota Commissioner of Commerce |
EXHIBIT C
RETAIL CENTER FRANCHISEES AND COMPANY-OWNED RETAIL CENTERS AS OF SEPTEMBER 30, 2024
| State | State Agency | Agent for Service of Process | |---|---|---| | NEW YORK | NYS Department of Law | New York Secretary of State | | | Investor Protection Bureau | New York Department of State | | | 28 Liberty Street, 21st Floor | 99 Washington Avenue | | | New York, NY 10005 | Albany, NY 12231 | | | (212)-416-8222 | (518) 473-2492 | | NORTH DAKOTA | North Dakota Securities Department 600 East Boulevard, Fourteenth Floor, Dept. 414 Bismarck, ND 58505-0510 (701) 328-4712 | North Dakota Securities Commissioner | | RHODE ISLAND | Department of Business Regulation Division of Securities 1511 Pontiac Avenue, Building 69-1 Cranston, RI 02920 (401) 462-9585 | Director of Rhode Island Department of Business Regulation | | SOUTH DAKOTA | Department of Labor and Regulation Division of Insurance Securities Regulation 124 South Euclid Suite 104 Pierre, SD 57501-3185 (605) 773-3563 | Director of the Division of Insurance-Securities Regulation | | VIRGINIA | State Corporation Commission | Clerk of State Corporation | | | Division of Securities and Retail Franchising | Commission | | | 1300 East Main Street, 9th Floor | 1300 East Main Street, 1st Floor | | | Richmond, VA 23219 | Richmond, VA 23219 | | | (804) 371-9051 | (804) 371-9733 | | WASHINGTON | Department of Financial Institutions Securities Division P.O. Box 41200 Olympia, WA 98504-1200 | Director of Department of Financial Institutions Securities Division 150 Israel Road SW Tumwater, WA 98501 (360) 902-8760 | | WISCONSIN | Wisconsin Securities Commissioner Securities and Franchise Registration 345 W. Washington Avenue Madison, WI 53703 (608) 266-8559 | Commissioner of Securities of Wisconsin |
| 3) | abandons or refuses | to actively operate | the Center | for 5 consecutive | |---|---|---|---|---|
| FRANCHISE OWNER | ADDRESS | CITY | ST | ZIP | PHONE NO. |
|---|---|---|---|---|---|
| 2nd Gen Business | 813 Oak St Ste 10 | Conway | AR | 72032-4419 | (501) 358-6210 |
| Development and Investments, | |||||
| LLC | |||||
| Howard and Misty Ridenhour | 12963 Old Route 66 Ste 50340 | Parks | AZ | 86018-9997 | (928) 635-4741 |
| Postal Cat Foot, LLC | 4764 E Sunrise Dr | Tucson | AZ | 85718-4535 | (520) 529-5738 |
| Paryas, Inc. | 5737 Kanan Rd | Agoura Hills | CA | 91301-1689 | (818) 707-9197 |
| 5 S Shipping, LLC | 2710 Alpine Blvd Ste K | Alpine | CA | 91901-2276 | (619) 659-8082 |
| RDANDBD, LLC | 751 S Weir Canyon Rd Ste 157 | Anaheim | CA | 92808-1800 | (714) 998-8806 |
| Paul S. & Reshmini D. | 3377 Deer Valley Rd | Antioch | CA | 94531-6664 | (925) 706-0166 |
| Dealmeida | |||||
| Shreya Inc. | 1171 E Alosta Ave | Azusa | CA | 91702-2740 | (626) 771-2340 |
| Dilan Rajesh Patel | 300 S Highland Springs Ave Ste 6C | Banning | CA | 92220-9802 | (951) 769-7170 |
| Nareshkumar and Pragna | 2425 Channing Way Ste B | Berkeley | CA | 94704-2260 | (510) 548-4680 |
| Bhakta | |||||
| Khalid Rassuli & Asila | 3130 Balfour Rd Ste D | Brentwood | CA | 94513-5516 | (925) 513-1750 |
| Momand | |||||
| CaptMat Shipping Inc. |
Source: Item 23 — Receipts (FDD pages 110–299)
What This Means (2025 FDD)
According to the 2025 FDD, in certain states, specific addenda clarify the effect of documents signed by Annex Brands franchisees regarding waivers of claims. For franchisees in Rhode Island, the franchise agreement and any related documents are supplemented to ensure that no statement, questionnaire, or acknowledgment signed by the franchisee can waive claims under state franchise law, including claims of fraud in the inducement. This provision overrides any other conflicting terms in any document associated with the franchise agreement.
Similarly, for Annex Brands franchisees in New York, the franchise agreement is supplemented to prevent any statement, questionnaire, or acknowledgment from waiving claims under state franchise law, including fraud in the inducement. This protection ensures that franchisees cannot inadvertently relinquish their legal rights through standard documents signed during the franchise commencement.
The same protection extends to franchisees in Washington, where the franchise agreement is supplemented to ensure that signed documents do not waive claims under state franchise law, including fraud in the inducement. This consistent approach across multiple states indicates Annex Brands's awareness of varying state franchise laws and their effort to comply by ensuring franchisees' rights are protected against unintentional waivers. This also applies to franchisees in Indiana, Michigan, South Dakota, and Wisconsin.