What happens if an Annex Brands franchisee sells their converted Center before 1 year of operation?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
Center; or
- c) $17,500 if this Agreement is for a Center that will be converted from a qualifying existing business providing the same services to the public; provided, however, that Franchisee will also pay to Franchisor a conversion training fee of $4,000; and provided further that the Center must be operational within 365 days after this Agreement is signed and must be owned and operated by Franchisee for a minimum of 1 year thereafter; and provided further that if the Center is sold before the completion of 1 year of operation, Franchisee must pay to Franchisor the discounted amount of the initial franchise fee ($17,500) upon sale of the Center; or
- d) $13,125 if this Agreement is for a Center that will be converted from a qualifying existing business providing the same services to the public and the Franchisee qualifies for the VetFran discount; provided, however, that Franchisee will also pay to Franchisor a conversion training fee of $4,000; and provided further that the Center must be operational within 365 days after this Agreement is signed and must be owned and operated by Franchisee for a minimum of 1 year thereafter; and provided further that if the Center is sold before the completion of 1 year of operation, Franchisee must pay to Franchisor the discounted amount of the initial franchise fee ($21,875) upon sale of th
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, the consequences of selling a converted Center before one year of operation depend on the initial franchise fee paid. If the initial franchise fee for a standard or flex Center was $17,500 due to the conversion, the franchisee must pay Annex Brands $17,500 upon the sale of the Center. If the franchisee received a VetFran discount and paid $13,125 for the converted Center, they must pay Annex Brands $21,875 upon selling the Center before the one-year mark.
This stipulation ensures that Annex Brands recoups the discounted portion of the initial franchise fee if a franchisee does not operate the converted center for at least one year. This policy is in place because the initial franchise fee is reduced to support the conversion of an existing business into an Annex Brands franchise, with the expectation that the franchisee will operate the business for a reasonable period.
For a prospective franchisee, this means that there is a financial disincentive to selling the converted center quickly after opening. It is important to consider this potential obligation when evaluating the financial viability and long-term plans for the franchise. Franchisees should carefully assess their ability to commit to operating the converted center for at least one year to avoid incurring this additional cost.
This condition is fairly specific to converted centers and aims to prevent franchisees from taking advantage of the lower initial fee without fully committing to the Annex Brands system. It is crucial for potential franchisees to fully understand this obligation and factor it into their business plan and financial projections.