Does the restriction on transfer for Annex Brands include transfer of ownership interest in the event of death?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
- D. DEATH OR DISABILITY OF FRANCHISEE. Upon the death or permanent disability of Franchisee or, if Franchisee is a corporation, partnership, LLC or other entity, the owner of a controlling interest in the Franchise or Franchisee, or the executor, administrator, conservator, guardian or other personal representative of such person or entity, will transfer such person or entity's ownership interest to a third party approved by Franchisor. Transfer of such interest in the Franchise or Franchisee (including transfer by bequest or inheritance) will be completed within a reasonable time, not to exceed 6 months from the date of death or permanent disability, and will be subject to all the terms and conditions applicable to transfer contained in this Section 13. Failure to transfer such interest in the Franchise or Franchisee within said period of time may constitute a default of this Agreement. For purposes of this Agreement, the term "permanent disability" will mean a mental or physical disability, impairment or condition that is reasonably expected to prevent or actually does prevent Franchisee or an owner of a controlling interest in the Franchise or Franchisee from managing and/or supervising the Center as required under Subsection 9.H of this Agreement for a period of 90 days from the onset of such disability, impairment or condition.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands's 2025 Franchise Disclosure Document, the transfer of ownership interest is restricted in the event of death. Specifically, if the franchisee or the owner of a controlling interest in the franchise dies, their ownership interest must be transferred to a third party approved by Annex Brands. This transfer includes transfers by bequest or inheritance.
The transfer must be completed within six months from the date of death. The transfer is subject to all the standard terms and conditions applicable to transfers, as outlined in the franchise agreement. Failure to complete the transfer within the specified timeframe may result in a default of the agreement.
This provision ensures that Annex Brands maintains control over who operates its franchises, even in the event of the franchisee's death. The estate of the deceased franchisee must find a buyer acceptable to Annex Brands within a limited time frame, or risk losing the franchise. This is a fairly standard clause in franchise agreements to protect the integrity of the brand and ensure consistent operations.