What is the amount of the security deposit required for an Auntie Annes SRU, and is it interest-bearing?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
from Lessor or Lessor's designee.
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- Term. This Agreement shall be effective and binding from the date of execution and shall terminate upon the earlier of (i) the expiration or termination of the Lease Agreement; (ii) the expiration or termination of the Franchise Agreement and/or SRU Addendum; or (iii) the termination of this Agreement pursuant to Section 14 below.
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- Lessee Obligations. Lessee must provide Lessor with the following items:
- a. Lease Agreement. A copy of the signed Lease Agreement or a letter of approval from the Landlord for the operation of the SRU for a minimum term of two (2) months shall be delivered the Lessor upon execution of this Agreement. Lessor does not guarantee that
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, a franchisee is required to pay a security deposit for a Satellite Retail Unit (SRU). Upon execution of the SRU Addendum, the franchisee (Lessee) must provide the franchisor (Lessor) with a $1,000 security deposit. This deposit is non-interest bearing, meaning that the franchisee will not accrue any interest on the deposited amount while it is held by Auntie Annes.
The security deposit serves to cover any outstanding amounts owed under the SRU Addendum, including return shipping costs, and repair or replacement costs for any lost or damaged items. After the SRU is returned to Auntie Annes and fully inspected, the remaining security deposit, less any deductions for the aforementioned costs, will be returned to the franchisee within 30 days.
However, if the cost of necessary repairs exceeds the $1,000 security deposit, Auntie Annes reserves the right to charge the franchisee for the difference between the actual cost of repairs and the security deposit. This means that franchisees could potentially owe additional money to Auntie Annes beyond the initial security deposit if significant damage occurs to the SRU during their operation. Franchisees should factor this potential liability into their financial planning when considering operating an SRU.