Under what circumstances can Annex Brands acquire an entity that owns businesses offering similar products/services as the Center without violating the Protected Area agreement?

According to Annex Brands's 2025 Franchise Disclosure Document, Annex Brands may acquire an entity or a portion of its assets that owns, operates, or licenses businesses offering the same or similar products and services as the franchised Center without it being considered a violation of the Protected Area agreement. This can occur when Annex Brands periodically acquires an entity or a portion of its assets, such as franchise agreements, contracts, or licenses. Similarly, it applies if Annex Brands or a portion of its assets is acquired by another entity.

This provision means that a franchisee's protected area is not necessarily exclusive in the event of acquisitions. Annex Brands retains the right to grow through acquisition, even if those acquired businesses operate within a franchisee's protected area. The FDD specifies that the location or operation of such acquired entities or businesses, whether franchised or not, within the Protected Area, will not be deemed a violation of the agreement.

For a prospective franchisee, this clause introduces an element of risk. While the franchise agreement grants a protected area, this protection is limited by Annex Brands's ability to acquire competing businesses within that area. It is important for potential franchisees to understand that their protected area is subject to change based on Annex Brands's strategic decisions regarding acquisitions. This is a fairly standard clause in franchise agreements, as it allows the franchisor to grow and adapt without being unduly restricted by existing protected areas.