In a legal action involving Annex Brands, what costs are the franchisee responsible for covering?

According to Annex Brands's 2025 Franchise Disclosure Document, if a franchisee initiates a legal action for damages, injunctive relief, the return of property, or any other legal or equitable remedy, they agree to cover Annex Brands's reasonable attorneys' fees, court costs, and reasonable out-of-pocket expenses for the action. This means that regardless of the outcome of the legal action, the franchisee may be responsible for Annex Brands's legal expenses in addition to their own.

This provision places a significant financial risk on the franchisee. Even if the franchisee has a strong case, the potential cost of covering Annex Brands's legal fees could deter them from pursuing legal action. This could create an imbalance of power, where Annex Brands might be less hesitant to engage in behavior that could potentially lead to legal disputes, knowing that the franchisee may be reluctant to sue.

It is important to note that the agreement will be governed by the laws of the state in which Annex Brands's principal business office is located at the time of signing the agreement. Franchisees should consult with an attorney to fully understand the implications of this clause and how it may affect their rights and obligations under the franchise agreement, especially considering the laws of the governing state. This is a fairly common clause in franchise agreements, but the specific terms can vary, so prospective franchisees should carefully review this section of the FDD and the franchise agreement.