What is the relationship between the Franchise Agreement and the Non-Competition and Non-Solicitation Agreement with Annex Brands?

According to the 2025 Annex Brands FDD, the Non-Competition and Non-Solicitation Agreement is closely tied to the Retail Center Franchise Agreement. The Non-Competition and Non-Solicitation Agreement is identified as Attachment 11 to the Franchise Agreement. Franchisees acknowledge that the benefits and opportunities they receive from becoming a franchisee under the Franchise Agreement serve as consideration for the promises made in the Non-Competition and Non-Solicitation Agreement. This means that by entering into the Franchise Agreement, the franchisee simultaneously agrees to the terms of the Non-Competition and Non-Solicitation Agreement.

The Non-Competition and Non-Solicitation Agreement includes both in-term and post-term covenants. During the term of the Franchise Agreement, franchisees are restricted from engaging in any business that competes with Annex Brands or from diverting customers away from other Annex Brands locations. These restrictions apply without any geographic limitations.

Upon conclusion of the Franchise Agreement (expiration, termination, non-renewal, or transfer), the Non-Competition and Non-Solicitation Agreement imposes further restrictions. For a period of two years after the conclusion of the franchise, franchisees are prohibited from engaging in any competitive business within a 5-mile radius of their former location or any other Annex Brands location. They are also restricted from soliciting or conducting business with terminated corporate accounts of Annex Brands for one year. These post-term covenants are designed to protect Annex Brands' market share and customer relationships after a franchisee leaves the system. As part of transferring ownership, the franchisee must also execute a non-competition covenant in the same form as the Non-Competition and Non-Solicitation Agreement for a minimum of two years.