What specific services must a competing business offer to trigger the alternative post-term non-competition covenant for Annex Brands franchisees?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
As an alternative to Subsection 3(b)(iii) above, and only if the applicable former Center is located in a state whose public policy disfavors the enforceability of postterm non-competition covenants against franchisees, then on the Conclusion of the Franchise under the Franchise Agreement, in accordance with the time period and geographic restrictions set forth below, Covenantor will not directly or indirectly (such as through corporations or other entities controlled by Covenantor or by, through or in conjunction with, any other individual person or persons including but not limited to Covenantor's spouse if any, relatives, employees or business affiliates), own, maintain, engage in, be associated with, be employed by, advise, assist, invest in, be landlord to, franchise, make loans to, or have any interest in any business which is the same, competes with, or is substantially similar to Franchisee's Center, and:
i. which sells packaging and shipping services (which constitute only a limited portion of all products and services sold by Franchisee's Center);
ii. which is located at the premises of Franchisee's Center; and
iii. with such partial restriction limited to a six (6) month period following the Conclusion of the Franchise under the Franchise Agreement.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to the 2025 Annex Brands Franchise Disclosure Document, the alternative post-term non-competition covenant is triggered if a competing business sells packaging and shipping services, but only if those services constitute a limited portion of all products and services sold by the Annex Brands franchisee's center. This alternative covenant applies only if the former Annex Brands center is located in a state whose public policy disfavors the enforceability of post-term non-competition covenants against franchisees.
This alternative covenant also stipulates that the competing business must be located at the premises of the former Annex Brands franchisee's center. The restriction under this alternative covenant is limited to a six-month period following the conclusion of the franchise agreement.
It is important to note that Annex Brands retains the right to unilaterally reduce the scope of any part of the post-term non-competition covenant. This means that Annex Brands can lessen the restrictions on a former franchisee, providing them with more flexibility in their future business endeavors.