Under what conditions can Annex Brands terminate a franchise agreement with cause?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Franchise Agreement | Summary | |
|---|---|---|---|
| (a) | Length of the franchise term | 2.A | 20 years. |
| (b) | Renewal or extension of the term | 14.A | An additional 20-year term. |
| (c) | Requirements for you to renew or extend | 14.A to C | Substantially comply with franchise agreement and all other agreements with us or our affiliates; notify us of intent to renew 6-12 months before 20-year anniversary of execution of franchise agreement; show evidence of right to possess site, or secure approved substitute site; fully comply with specifications and standards for franchised businesses; sign general release; sign then current franchise agreement and related agreements; pay renewal fee. At the expiration of the term, if you seek to renew your franchise, you may be asked to sign a new franchise agreement that contains terms and conditions materially different from those in your previous franchise agreement, such as different fee requirements and territorial rights. |
| (d) | Termination by you | Not applicable | Subject to state law. |
| (e) | Termination by us without cause | Not applicable | We cannot terminate your franchise without cause. |
| (f) | Termination by us with cause | 3.A, 14.D and 15 | We may terminate your franchise only if you default. |
| (g) | "Cause" defined-curable defaults | 15.B | You fail to pay required sums when due to us or our affiliates and do not cure within 10 days after notice; you fail to comply with franchise agreement, manuals, operating procedures, standards or specifications and do not cure within 30 days after notice; you fail to operate the franchise for 5 consecutive business days and do not cure within 7 days after notice. |
Source: Item 17 — Renewal, Termination, Transfer, and Dispute Resolution (FDD pages 71–74)
What This Means (2025 FDD)
According to Annex Brands's 2025 Franchise Disclosure Document, Annex Brands can terminate a franchise agreement with cause if the franchisee defaults. The FDD outlines both curable and non-curable defaults that can lead to termination.
Curable defaults include failing to pay required sums to Annex Brands or its affiliates when due, if the franchisee does not cure the failure within 10 days after notice. It also includes failing to comply with the franchise agreement, manuals, operating procedures, standards, or specifications, if the franchisee does not cure within 30 days after notice. Additionally, if a franchisee fails to operate the franchise for 5 consecutive business days and does not cure within 7 days after notice, Annex Brands has grounds for termination.
Non-curable defaults, which allow Annex Brands to terminate the agreement immediately upon notice, include several scenarios. These include failing to open the franchise or locate an acceptable site within 365 days after signing the franchise agreement. Other non-curable defaults are failing to give notice of non-renewal or satisfy renewal conditions, intentionally making material misrepresentations or omissions in the franchise application, being convicted of a felony or crime that may adversely affect the reputation of Annex Brands or the franchise, making unauthorized use or disclosure of confidential information, surrendering or transferring control of the franchise in violation of the agreement, underreporting Gross Receipts by 5% at least 3 times, making unauthorized use of any Mark, having the lease or sub-lease terminated, failing to complete initial training, or receiving 3 notices of default in a 12-month period.
These termination conditions are typical in franchising, as they protect the franchisor's brand standards and financial interests. Prospective franchisees should carefully review these conditions to understand their obligations and the potential consequences of non-compliance.