What rights does Annex Brands have upon the expiration, termination, or non-renewal of the franchise granted in the Franchise Agreement?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
| FOR VALUE RECEIVED, the undersigned ("Assignor") hereby assigns, transfers and sets over unto ANNEX BRANDS, INC., a California corporation ("Assignee"), all of Assignor's right, title and interest as tenant in, to and under that certain lease, a copy of which is attached hereto as Exhibit A (the "Lease"), respecting premises commonly known as (the "Premises"). This Assignment is for collateral purposes only and, except as specified herein, Assignee will have no liability or obligation of any kind whatsoever arising from or in connection with this Assignment or the Lease unless Assignee will take possession of the Premises demised by the Lease pursuant to the terms hereof and will assume the obligations of Assignor thereunder. |
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| Assignor represents and warrants to Assignee that it has full power and authority to assign |
| the Lease and its interest therein and that Assignor has not previously assigned or transferred, and |
| is not otherwise obligated to assign or transfer, any of its interest in the Lease or the Premises |
| demised thereby. |
| On a default by Assignor under the Lease or under that certain Franchise Agreement with |
| an effective date of("Franchise Agreement") between Assignor and |
| Assignee for that certain Center located at the Premises, in the event of a default by Assignor under |
| any document or instrument securing the Franchise Agreement, or on expiration, termination or |
| non-renewal of the Franchise granted in the Franchise Agreement, Assignee will have the right |
| and is hereby empowered to take possession of the Premises demised by the Lease, expel Assignor |
| therefrom, and, in such event, Assignor will have no further right, title or interest in the Lease and |
| will remain liable to Assignee for all past due rents Assignee will be required to pay to Lessor to |
| effectuate the assignment contemplated hereunder. All provisions of the Franchise Agreement |
| remain enforceable, including but not limited to Subsection 16.F, irrespective of whether this |
| Collateral Assignment of Lease is fully executed, implemented or otherwise enforced. |
| Assignor agrees that it will not suffer or permit any surrender, termination, amendment or |
| modification of the Lease without Assignee's prior written consent. Throughout the term of the |
| Franchise, Assignor agrees that it will elect and exercise all options to extend the term of or renew |
| the Lease not less than 30 days before the last day that said option must be exercised, unless |
| Assignee otherwise agrees in writing. On Assignee's failure otherwise to agree in writing, and on |
| failure of Assignee to elect to extend or renew the Lease as aforesaid, Assignor hereby appoints |
| Assignee as its true and lawful attorney-in-fact to exercise such extension or renewal options in |
| the name, place and stead of Assignor for the sole purpose of effecting such extension or renewal. |
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands's 2025 Franchise Disclosure Document, upon the expiration, termination, or non-renewal of a franchise, Annex Brands retains several rights to protect its brand and financial interests. Specifically, franchisees must promptly pay all outstanding debts, including royalty fees, marketing fees, technology service fees, insurance premiums, and any other forms of indebtedness to Annex Brands or its affiliates within 10 days of the termination date. This ensures that Annex Brands recovers all pending dues.
Annex Brands also requires franchisees to cease using any trademarks, service marks, trade dress, or commercial symbols associated with the Annex Brands system. Franchisees must remove all signs, decor items, advertising materials, and other articles displaying Annex Brands' marks from the premises. Furthermore, franchisees must alter the former center's appearance to clearly differentiate it from other Annex Brands locations, preventing public confusion. This protects Annex Brands' brand identity and prevents unauthorized use of its intellectual property.
Additionally, Annex Brands has the right to take possession of the premises if the franchisee defaults on the lease or upon expiration, termination, or non-renewal of the franchise. In such cases, Annex Brands can expel the franchisee and assume control of the leased property. To further secure their position, Annex Brands requires that any lease or sublease for the center includes a Collateral Assignment of Lease, allowing Annex Brands to assign the lease to themselves or their designee without the lessor's consent. This provision ensures Annex Brands can maintain control over the location and continue operations if desired.