Does Annex Brands' lease agreements contain any material residual value guarantees?

According to Annex Brands' 2025 Franchise Disclosure Document, the company's lease agreements do not contain any material residual value guarantees. This means that Annex Brands is not obligated to purchase the leased asset at the end of the lease term for a predetermined amount. For a prospective franchisee, this is a positive aspect, as it reduces potential financial risks associated with lease agreements. Franchisees typically lease property and equipment, and without residual value guarantees, they avoid the risk of being forced to buy an asset that may be worth less than the guaranteed value at the end of the lease.

This lack of residual value guarantees provides Annex Brands with more flexibility in managing its lease obligations. It also aligns with common industry practices, where lease agreements often do not include such guarantees, especially for standard operating leases. This clause protects Annex Brands from potential losses if the market value of the leased assets declines significantly by the end of the lease term.

For a potential Annex Brands franchisee, the absence of these guarantees simplifies lease negotiations and reduces long-term financial commitments. It allows franchisees to focus on the operational aspects of their business without worrying about the complexities of residual value assessments and potential buy-out obligations. This can make the franchise opportunity more attractive and financially manageable.