What is Annex Brands' policy regarding arbitration location, and who bears the costs?

According to Annex Brands' 2025 Franchise Disclosure Document, the franchise agreement mandates binding arbitration, excluding disputes related to trademarks, real estate, or injunctive relief. The arbitration proceedings will take place at the American Arbitration Association location closest to Annex Brands' corporate offices. The costs associated with arbitration are to be shared equally between Annex Brands and the franchisee.

However, this policy is subject to certain state laws. For instance, the California State Addendum modifies this by stating that the California Business and Professions Code Sections 20000 through 20043 provide certain rights to franchisees, including provisions relating to arbitration, and that to the extent that the provisions of the franchise agreement are inconsistent with the terms of the Act, the terms of the Act will control in California. The addendum encourages franchisees to seek legal counsel to determine the applicability of California and federal laws to any provisions of a franchise agreement restricting venue to a forum outside the state of California.

Furthermore, the North Dakota State Addendum stipulates that all disputes must be arbitrated either in North Dakota or in a mutually agreed location. This indicates that the standard arbitration location may be altered based on the franchisee's location and relevant state laws. In North Dakota, the default location is either North Dakota or a location mutually agreed upon by both parties.

Prospective franchisees should be aware of these variations and consult with legal counsel to understand how these provisions and state-specific addenda affect their rights and obligations regarding arbitration. Understanding the location and cost implications of arbitration is crucial for franchisees when entering into an agreement with Annex Brands.