Is the initial franchise fee refundable for an Annex Brands franchise?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
the Center.
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- Refundability. The initial franchise fee is fully earned when paid and non-refundable in consideration for administrative and other expenses that Franchisor incurs in entering into this Agreement, and for lost or deferred opportunity to enter into a franchise agreement with others, except that:
- a) If, before initial training, Franchisee decides not to continue as a franchisee, and if Franchisor approves termination of the Franchise and determines that Franchisee is entitled to a refund, Franchisor may refund the initial franchise fee, less
$10,000 to compensate Franchisor for its services to that point, and less any actual out-of-pocket expenses, including any broker referral fees that Franchisor may have been required to pay in connection with Franchisee's execution of this Agreement. Franchisee agrees and acknowledges that any such refund will be Franchisor's only obligation to Franchisee, and that Franchisee and its owners will execute general releases, in forms satisfactory to Franchisor. Franchisee further agrees and acknowledges that, in the event of such termination, Franchisee will be bound by the provisions in Section 16 of this Agreement.
- b) If, before or during initial training, Franchisor, in its sole discretion, determines that Franchisee cannot successfully complete initial training or that Franchisee is not making satisfactory progress in initial training, Franchisor may terminate the Franchise. If Franchisor terminates the Franchise, Franchisor may refund the initial franchise fee, less $10,000 to compensate Franchisor for its services to that point, and less any actual out-of-pocket expenses, including any broker referral fees that Franchisor may have been required to pay in connection with Franchisee's execution of this Agreement. Franchisee agrees and acknowledges that such refund will be Franchisor's only obligation to Franchisee, and that Franchisee and its owners will execute general releases, in forms satisfactory to Franchisor. Franchisee further agrees and acknowledges that, in the event of such termination, Franchisee will be bound by the provisions in Section 16 of this Agreement.
- c) If Franchisee is unable to locate an acceptable site in accordance with Subsection 3.A of this Agreement or if Franchisee fails to open the Center in accordance with Subsection 3.E of this Agreement, Franchisor may terminate the Franchise.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, the initial franchise fee is generally non-refundable but there are some exceptions. The FDD states that the initial franchise fee is considered fully earned upon payment due to administrative and other expenses Annex Brands incurs when entering into the agreement, as well as the lost opportunity to franchise with someone else.
However, under certain conditions, a refund of the initial franchise fee may be possible. If the franchisee decides not to continue before initial training, and Annex Brands approves the termination and determines a refund is warranted, Annex Brands may refund the initial franchise fee. However, they will deduct $10,000 to cover their services up to that point, as well as any out-of-pocket expenses, including broker referral fees. The franchisee must also execute general releases that are satisfactory to Annex Brands.
Additionally, if Annex Brands determines before or during initial training that the franchisee cannot successfully complete the training or is not making satisfactory progress, Annex Brands may terminate the franchise and refund the initial franchise fee, less the same deductions of $10,000 and any out-of-pocket expenses. However, if the franchisee decides to purchase an existing center instead of opening a new one after signing the franchise agreement, Annex Brands will not refund any of the initial franchise fee, regardless of whether Annex Brands terminates the franchise.