What services does the $10,000 deduction from the initial franchise fee refund for Annex Brands cover?

According to Annex Brands' 2025 Franchise Disclosure Document, if the franchise is terminated before initial training begins, Annex Brands may refund the initial franchise fee, but will deduct $10,000. This $10,000 is intended to compensate Annex Brands for services rendered up to that point.

The services covered by this $10,000 deduction include several key pre-opening activities. These are site evaluation and selection, which involves assessing potential locations for the retail center. Center layout, which includes planning the physical arrangement of the retail space. It also covers travel and living expenses incurred by Annex Brands' representatives while assisting the franchisee. Compensation to Annex Brands' employees and agents for their time and expertise is also included. Additionally, the deduction covers legal fees and related expenses that Annex Brands incurs. Finally, it accounts for other pre-opening supervision and advice provided to the franchisee.

In addition to the $10,000 deduction for services, Annex Brands will also deduct any actual out-of-pocket expenses they have incurred. This includes any broker referral fees that Annex Brands may have been required to pay in connection with the franchisee's execution of the franchise agreement. This means the franchisee's refund could be further reduced by these additional costs.

It is important to note that if Annex Brands terminates the franchise after the franchisee begins initial training, no portion of the initial franchise fee will be refunded. This policy highlights the importance of carefully evaluating the franchise opportunity and ensuring a good fit before commencing training, as the initial franchise fee becomes non-refundable once training starts.