Is the sublicense granted to Annex Brands franchisees for the 'Product' transferable?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
| As an inducement to Annex Brands, Inc., a California corporation ("Franchisor"), to enter into that certain franchise agreement with an effective date of ("Agreement") by and between Franchisor and |
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| ("Franchisee"), I/we, as personal guarantor(s) (each a "Guarantor"), jointly and severally, |
| absolutely and unequivocally, personally guarantee the performance by Franchisee of all |
| obligations of Franchisee to Franchisor under, or arising out of, the Agreement, and all other |
| agreements signed between Franchisor or any of Franchisor's affiliates ("Other Agreements"), and |
| agree to perform those obligations should Franchisee be unable to perform. The obligations |
| assumed under this Continuing Personal Guarantee are not transferable. |
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the obligations assumed under the Continuing Personal Guarantee with Annex Brands are not transferable. This guarantee ensures that a personal guarantor (likely the franchisee or a related party) is responsible for the franchisee's obligations to Annex Brands under the Franchise Agreement and any other agreements with Annex Brands or its affiliates.
This means that if a franchisee decides to sell or transfer their franchise, the personal guarantee cannot be transferred to the new franchisee or any other party. The original guarantor remains responsible for the original franchisee's obligations. This provides Annex Brands with a consistent and reliable assurance that the financial obligations of the franchise will be met, regardless of changes in ownership.
For a prospective Annex Brands franchisee, this implies that the personal guarantee is a long-term commitment. Even if they sell the franchise, they (or the original guarantor) remain liable for any outstanding obligations incurred during their time as a franchisee. This is a standard practice in franchising, as it protects the franchisor's interests and ensures financial stability within the franchise system.
It is important for potential franchisees and their guarantors to fully understand the implications of this continuing personal guarantee. They should seek legal and financial advice to assess the risks and obligations associated with it before signing the Franchise Agreement. This ensures they are fully aware of their responsibilities to Annex Brands, even after transferring the franchise.