Under what conditions might Annex Brands refund the initial franchise fee?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
the Center.
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- Refundability. The initial franchise fee is fully earned when paid and non-refundable in consideration for administrative and other expenses that Franchisor incurs in entering into this Agreement, and for lost or deferred opportunity to enter into a franchise agreement with others, except that:
- a) If, before initial training, Franchisee decides not to continue as a franchisee, and if Franchisor approves termination of the Franchise and determines that Franchisee is entitled to a refund, Franchisor may refund the initial franchise fee, less
$10,000 to compensate Franchisor for its services to that point, and less any actual out-of-pocket expenses, including any broker referral fees that Franchisor may have been required to pay in connection with Franchisee's execution of this Agreement. Franchisee agrees and acknowledges that any such refund will be Franchisor's only obligation to Franchisee, and that Franchisee and its owners will execute general releases, in forms satisfactory to Franchisor. Franchisee further agrees and acknowledges that, in the event of such termination, Franchisee will be bound by the provisions in Section 16 of this Agreement.
- b) If, before or during initial training, Franchisor, in its sole discretion, determines that Franchisee cannot successfully complete initial training or that Franchisee is not making satisfactory progress in initial training, Franchisor may terminate the Franchise. If Franchisor terminates the Franchise, Franchisor may refund the initial franchise fee, less $10,000 to compensate Franchisor for its services to that point, and less any actual out-of-pocket expenses, including any broker referral fees that Franchisor may have been required to pay in connection with Franchisee's execution of this Agreement. Franchisee agrees and acknowledges that such refund will be Franchisor's only obligation to Franchisee, and that Franchisee and its owners will execute general releases, in forms satisfactory to Franchisor. Franchisee further agrees and acknowledges that, in the event of such termination, Franchisee will be bound by the provisions in Section 16 of this Agreement.
- c) If Franchisee is unable to locate an acceptable site in accordance with Subsection 3.A of this Agreement or if Franchisee fails to open the Center in accordance with Subsection 3.E of this Agreement, Franchisor may terminate the Franchise. If Franchisor terminates the Franchise:
- i) Before Franchisee begins initial training, Franchisor may refund the initial franchise fee, less $10,000 to compensate Franchisor for its services to that point, and less any actual out-of-pocket expenses, including any broker referral fees that Franchisor may have been required to pay in connection with Franchisee's execution of this Agreement.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, the initial franchise fee is generally non-refundable, as it is considered fully earned upon payment to cover administrative and other expenses. However, there are specific circumstances under which a refund may be possible.
If a franchisee decides not to continue before initial training, Annex Brands may approve the termination and issue a refund of the initial franchise fee. However, this refund will be reduced by $10,000 to compensate Annex Brands for services rendered up to that point, as well as any actual out-of-pocket expenses, including broker referral fees. Similarly, if Annex Brands determines, either before or during initial training, that the franchisee cannot successfully complete the training or is not making satisfactory progress, Annex Brands may terminate the franchise and refund the initial franchise fee, again less $10,000 and any out-of-pocket expenses.
Additionally, if the franchisee is unable to secure an acceptable site as per the agreement or fails to open the center according to the specified terms, Annex Brands may terminate the franchise. In such cases, a refund of the initial franchise fee, less the standard deductions for services and expenses, may be provided. In all instances where a refund is granted, the franchisee must execute general releases in a form satisfactory to Annex Brands, acknowledging that the refund is the sole obligation of Annex Brands. It's important to note that if a franchisee chooses to purchase an existing center instead of opening a new one, no refund of the initial franchise fee will be provided, regardless of whether Annex Brands terminates the franchise agreement.