For Annex Brands, does a violation of Section 2 of the agreement by the Covenantor constitute a default by the Franchisee of the corresponding Franchise Agreement?
Annex_Brands Franchise · 2025 FDDAnswer from 2025 FDD Document
It is the parties' desire and intention that the covenants contained in this Agreement will be construed as agreements severable from and independent of each other and of any other provision of this or any contract or agreement between the parties, except that any violation of Section 2 of this Agreement by Covenantor will also constitute a default by Franchisee of the Franchise Agreement corresponding to this Agreement.
Source: Item 22 — Contracts (FDD pages 109–110)
What This Means (2025 FDD)
According to Annex Brands' 2025 Franchise Disclosure Document, a violation of Section 2 of the agreement by the Covenantor will constitute a default by the Franchisee of the corresponding Franchise Agreement. This is explicitly stated in Section 7 of the agreement.
This means that if the Covenantor, who is either the Franchisee or an equity owner of the Franchisee, violates Section 2 of the agreement, it will be considered a default of the Franchise Agreement itself. A default can lead to serious consequences, including termination of the franchise agreement.
Prospective franchisees should carefully review Section 2 of the agreement to understand what actions or omissions would constitute a violation. It is crucial to comply with all terms of the agreement to avoid defaulting on the Franchise Agreement. Franchisees should seek legal counsel to fully understand their obligations and the potential ramifications of any violations.