When Annex Brands terminates or refuses to renew a franchise in Hawaii, what are franchisees entitled to be compensated for, specifically regarding inventory, supplies, equipment, and furnishings?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
- (2) Item 17 of this disclosure document is modified to include the following paragraph under the Summary column of part (i):
- Under Hawaii law, on termination or refusal to renew the franchise, you are entitled to be compensated for the fair market value, at the time of the termination or expiration of the franchise, of our inventory, supplies, equipment and furnishings purchased from us or a supplier approved or designated by us; provided that personalized materials which have no value to us need not be compensated for. If we refuse to renew the franchise for the purpose of converting your retail center to one owned and operated by us, we, in addition to the remedies described above, are required to compensate you for the loss of goodwill. We may deduct from such compensation reasonable costs incurred in removing, transporting and
disposing of your inventory, supplies, equipment and furnishings, and may offset from such compensation any moneys due us.
Source: Item 23 — Receipts (FDD pages 110–299)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, Hawaii state law provides certain protections to franchisees in the event of termination or non-renewal. Specifically, if Annex Brands terminates or refuses to renew a franchise in Hawaii, the franchisee is entitled to compensation for the fair market value of inventory, supplies, equipment, and furnishings. This compensation is based on the fair market value at the time of termination or expiration.
However, this compensation only applies to items purchased from Annex Brands or a supplier that Annex Brands has approved or designated. Personalized materials that have no value to Annex Brands are excluded from this compensation requirement. Additionally, if Annex Brands refuses to renew the franchise with the intention of converting the retail center to one that is owned and operated by them, they are required to compensate the franchisee for the loss of goodwill, in addition to the compensation for inventory, supplies, equipment, and furnishings.
Annex Brands is allowed to deduct reasonable costs incurred in removing, transporting, and disposing of the inventory, supplies, equipment, and furnishings from the compensation amount. They can also offset any money owed to them by the franchisee from the compensation. This means that any outstanding debts or financial obligations the franchisee has to Annex Brands can be subtracted from the compensation the franchisee receives.