For Annex Brands, what happens to the protected area if the franchise agreement is transferred?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
A transfer has the effect of superseding the previous franchise agreement, when a new franchise agreement is entered into with the transferee.
A consequence of entering into a new franchise agreement is that a new Protected Area described in Attachment 3 will be granted to the transferee and this new Protected Area may be smaller in size than the original Protected Area.
Franchisee should not represent to transferee that transferee will be granted the original Protected Area.
There may be other changes, such as changed fee, payment, operational and reporting requirements.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands's 2025 Franchise Disclosure Document, if a franchise agreement is transferred to a new franchisee, the original agreement is superseded by a new one. A key change is that the transferee will be granted a new protected area, as detailed in Attachment 3 of the franchise agreement. This new protected area may be smaller than the original protected area that the previous franchisee had.
This means that a franchisee looking to sell their Annex Brands franchise should not represent to potential buyers that they will receive the same protected area. The size of the protected area is subject to change upon transfer and is determined by Annex Brands when the new franchise agreement is created with the transferee.
In addition to changes in the protected area, the FDD notes that other terms of the franchise agreement could also change upon transfer. These potential changes include fees, payment schedules, operational requirements, and reporting requirements. Therefore, it is critical for both the selling franchisee and the potential buyer to understand that the terms of the new franchise agreement may differ significantly from the original agreement.