factual

If the alternative non-competition covenant applies to an Annex Brands franchisee, for how long is the franchisee restricted from operating a business selling packaging and shipping services at the former franchise location?

Annex_Brands Franchise · 2025 FDD

Answer from 2025 FDD Document

As an alternative to Subsection 3(b)(iii) above, and only if the applicable former Center is located in a state whose public policy disfavors the enforceability of postterm non-competition covenants against franchisees, then on the Conclusion of the Franchise under the Franchise Agreement, in accordance with the time period and geographic restrictions set forth below, Covenantor will not directly or indirectly (such as through corporations or other entities controlled by Covenantor or by, through or in conjunction with, any other individual person or persons including but not limited to Covenantor's spouse if any, relatives, employees or business affiliates), own, maintain, engage in, be associated with, be employed by, advise, assist, invest in, be landlord to, franchise, make loans to, or have any interest in any business which is the same, competes with, or is substantially similar to Franchisee's Center, and:

  • i. which sells packaging and shipping services (which constitute only a limited portion of all products and services sold by Franchisee's Center);

  • ii. which is located at the premises of Franchisee's Center; and

  • iii. with such partial restriction limited to a six (6) month period following the Conclusion of the Franchise under the Franchise Agreement.

Source: Item 22 — Contracts (FDD pages 109–110)

What This Means (2025 FDD)

According to the 2025 FDD, if the standard post-term non-competition covenant is unenforceable due to public policy in the state where the Annex Brands franchise is located, an alternative covenant may apply. This alternative covenant restricts the franchisee from operating a competing business that sells packaging and shipping services at the former franchise location for a period of six months following the conclusion of the franchise agreement.

This alternative restriction is more limited than the standard non-compete, which typically includes broader restrictions on competitive businesses within a certain radius for a longer period. The alternative covenant specifically targets the sale of packaging and shipping services at the former location, acknowledging that these services constitute only a portion of the products and services offered by an Annex Brands center.

It is important for prospective Annex Brands franchisees to understand the specific non-competition covenants that apply in their state and the implications of these restrictions on their future business activities. Franchisees should consult with legal counsel to fully understand the enforceability and scope of these covenants.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.