After transferring an Annex Brands franchise, what business activities are the franchisee and transferring owner prohibited from engaging in, according to the non-competition covenant?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Franchisee (if transferring), or any transferring owner, must execute a non-competition covenant in substantially the form of the Non-Competition and Non-Solicitation Agreement (Attachment 11) in favor of Franchisor and the transferee agreeing, for not less than a continuous 2 year period after the transfer, not to have any interest, either directly or indirectly, or through an Immediate Family Member, as an employee, manager, consultant, operator, lender, investor, financier, representative, disclosed or beneficial owner, part owner, proprietor, partner, principal, officer, director, co-venturer, stockholder (except as the owner of securities listed on a stock exchange or traded on the over-the-counter market that represent 5% or less of that class of securities), member, agent, participant or in any other capacity, in a business that offers business support, mailbox rental (physical and virtual), package receiving, postal, printing and copying (including digital printing and copying), digital transfer, offset printing, large-format printing, binding, finishing, personalized mailing, direct mail, packaging, crating, pick-up and
delivery, palletizing, freight, shipping, office supply, boxes and packaging materials, notary or fingerprinting products or services, or related products or services ("competitive business"), that is located within a radius of not less than 5 miles of: a) the Center or b) any Center in operation or under construction on the effective date of the transfer.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to the 2025 Annex Brands Franchise Disclosure Document, a transferring owner must adhere to a non-competition covenant for two years after the transfer. This agreement prevents the transferring owner from having any direct or indirect interest in a competitive business within a 5-mile radius of the transferred center or any other Annex Brands center in operation or under construction. This restriction applies to involvement as an employee, manager, consultant, operator, lender, investor, or in any other capacity. The restriction does not apply if the transferring owner has less than 5% beneficial interest in the outstanding equity securities of any publicly held corporation.
The definition of a "competitive business" includes offering business support, mailbox rental services (both physical and virtual), package receiving, postal services, printing and copying (including digital), digital transfer, offset printing, large-format printing, binding, finishing, personalized mailing, direct mail, packaging, crating, pick-up and delivery, palletizing, freight, shipping, office supplies, boxes and packaging materials, notary, and fingerprinting services. This broad definition aims to prevent the transferring owner from leveraging their experience and knowledge to compete with Annex Brands.
This non-competition covenant protects Annex Brands and its franchisees by preventing former owners from directly competing in the same geographic area and business activities. The covenant ensures that the transferee can operate without immediate competition from the previous owner, who is familiar with the business and local market. The non-compete agreement is in favor of both Annex Brands and the new transferee.