Who is responsible for the cost of insurance coverage for an Annex Brands franchise?

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To ensure adequate insurance coverage, Subsection 9.I of the franchise agreement requires you to obtain and maintain in force, at your sole expense, under policies of insurance issued by carriers with no less than a Best's rating of A, the following:

• 1. Comprehensive general, public, and product liability insurance, against claims for bodily and personal injury, death, and property damage caused by or occurring in conjunction with the operation of your retail center or otherwise in conjunction with your conduct of business under the franchise agreement, under 1 or more policies of insurance containing a minimum of $2,000,000 per occurrence and $4,000,000 aggregate liability coverage.
• 1. Notary professional liability insurance of at least $500,000 or the maximum permitted by the state if less than $500,000.
• 1. Property insurance against any claims at your retail center included within the classification "Causes of Loss – Special Form," including vandalism, malicious mischief and theft. The coverage must be in an amount not less than 100% of the actual replacement cost of your retail center, and also must include property of others in your care, custody or control with a minimum limit of $400,000, and employee dishonesty coverage with a minimum limit of $25,000.
• 1. Business interruption coverage on an "actual loss sustained" basis for a period of not less than 24 months or the maximum permitted by the state if less than 24 months.
• 1. Motor vehicle liability insurance policies covering all vehicles (owned, nonowned, leased, hired, rented or borrowed) operated by or on behalf of the business

conducted under the franchise agreement, and providing protection for injury caused to person or property by the vehicles in the minimum amount of $2,000,000.

• 1. Any workers' compensation, employer's liability or comparable insurance required by the law of the jurisdiction where your retail center is located, and all other insurance coverage that we periodically require.
• 1. For a flex Center that chooses to provide expanded services of household moving and other relocation products and services, "Bailee's" insurance that is in addition to small parcel, freight or transit damage insurance. The policy must include coverage of personal property of others in an insured's care, custody and control that is temporarily at the insured's retail center with a minimum limit of $400,000, coverage of personal property of others in the insured's care, custody and control at another location with a minimum limit of $300,000, and coverage of personal property of others while being transported in the insured's auto or truck with a minimum limit of $400,000.
• 1. If you provide expanded services of household moving and other relocation products and services: i) employment practices insurance (including sexual harassment, wrongful termination and discrimination coverage) in the amount of at least $500,000 for each incident and at least $1,000,000 in the aggregate; and ii) umbrella insurance (covering general liability, auto and employer's liability) with a minimum limit of at least $2,000,000.

For standard, flex and express retail centers, insurance coverage must be issued using the correct company classifications for businesses, such as retail centers specializing in selling business support, mailbox rental (physical and virtual), package receiving, postal, printing, copying, packaging, shipping, office supply, passport photo, notary, fingerprinting, and related products and services.

As described in Subsection 9.I of the franchise agreement, in addition to carrying the other insurance described above and in the franchise agreement, you must participate in any group-wide or other Annex Brands-sponsored insurance program regarding small parcel, freight, or transit damage and related risks, and you must pay fully and timely all premiums assessed to you for this insurance coverage. As part of our acquisition of PMCA, we acquired PMCA's insurance program that was implemented for the Pak Mail brand, and in 2019 we implemented this program for our other retail centers and brands. In our fiscal year ended September 30, 2024, we received $588,000 in revenue from the insurance program, or 2.4% of our total revenue of $24,936, and the insurance program had expenses of $268,000.

Source: Item 8 — Restrictions on Sources of Products and Services (FDD pages 39–43)