For Annex Brands, what happens if a transfer occurs without franchisor approval?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
FRANCHISEE MAY NOT TRANSFER WITHOUT FRANCHISOR APPROVAL.
Franchisee understands and acknowledges that the rights and duties created by this Agreement are personal to Franchisee or its owners and that Franchisor has granted rights to Franchisee under this Agreement in reliance upon the individual or collective character, skill, aptitude, attitude, business ability, and financial capacity of Franchisee or its owners.
Accordingly, without the prior written approval of Franchisor, the Franchise (or any interest in the Franchise), this Agreement (or any interest in this Agreement), the Center (or any interest in the Center), or the assets of the Center that are not purchased for resale (or any interest in such assets), may not be voluntarily, involuntarily, directly or indirectly, assigned, sold or otherwise transferred by Franchisee or any owner of Franchisee.
Any such assignment, sale or other transfer without Franchisor's approval is a default of this Agreement and conveys no rights to or interests in the Franchise, this Agreement, the Center or the assets of the Center that are not assets purchased for resale, or Franchisee.
Assignments, sales or other transfers subject to the foregoing restriction include, without limitation, the following:
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- sale, gift or other transfer of capital stock, or of a partnership, LLC or other ownership interest, in Franchisee;
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- merger or consolidation of Franchisee with another corporation, or issuance of capital stock, partnership, LLC or other ownership interests in Franchisee;
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands's 2025 Franchise Disclosure Document, any attempt to transfer the franchise, agreement, center, or its assets without prior written approval from Annex Brands constitutes a default of the agreement. This includes sales, assignments, or other transfers of stock, partnership interests, or membership interests within the franchisee's business entity.
This provision is in place because Annex Brands grants franchise rights based on the specific skills, aptitude, business ability, and financial capacity of the franchisee or its owners. Unauthorized transfers could introduce individuals or entities that do not meet Annex Brands's standards, potentially harming the brand and the network of franchisees.
The unauthorized transfer conveys no rights or interests to the new party in the franchise, agreement, center, or assets. This means Annex Brands would not recognize the transfer and the original franchisee would remain responsible for fulfilling the obligations under the franchise agreement. This clause protects Annex Brands's interests by ensuring control over who operates a franchise under its brand.
Prospective franchisees should understand that obtaining written approval from Annex Brands is essential before considering any transfer of ownership or interest in the franchise. Failure to do so could result in a default of the franchise agreement and the loss of any rights or interests in the franchise.