What happens to the goodwill associated with an Auntie Annes franchisee's activities upon expiration or termination of the Franchise Agreement?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
18. OBLIGATIONS ON EXPIRATION OR TERMINATION
- 18.1 General Obligations.
On expiration or termination of this Agreement for any reason, you must:
- A.
Immediately cease using the System, including the Marks and any confusingly similar names, marks, commercial symbols, systems, insignia, symbols, color schemes, trade dress, designs, procedures, domain names, and methods.
If you fail or refuse to make changes to the Franchised Business required to distinguish the Franchised Business from its former appearance, we have the right, in addition to all other remedies, to enter the Accepted Location and make the required changes on your behalf, and you must pay to us the entire costs we incur in making the changes, including interest from the date of demand, plus an administrative fee in an amount equal to 15% of the entire cost of the changes.
- B.
Immediately return to us: (i) all hard copies and electronic copies (capable of being returned) of the Confidential Information and Trade Secrets, including the Manuals, together with all copies of any of them; and (ii) all other manuals, records, files, instructions, correspondence and other materials relating to the operation of the Franchised Business ("Other Materials").
If you have on your computer systems, your e-mail accounts, or other digital storage systems or services copies of the Confidential Information, Trade Secrets, and/or Other Materials, you must immediately erase these copies.
You must provide us with a certification attesting to the fact that all copies of the Confidential Information, Trade Secrets, and Other Materials in your control or the control of your officers, directors, owners, employees, agents, and representatives have been returned or destroyed in accordance with this Section.
- C.
Within 5 days after expiration or termination, pay us and our affiliates the full amount you owe us and them.
- D.
Immediately stop identifying yourself in any way as our franchisee or former franchisee.
- E.
Immediately comply with the restrictive covenants in Section 15 (Confidential Information; Restrictive Covenants).
- F.
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, upon expiration or termination of the Franchise Agreement for any reason, the franchisee must immediately cease using the Auntie Annes System, including the Marks and any confusingly similar names, marks, commercial symbols, systems, insignia, symbols, color schemes, trade dress, designs, procedures, domain names, and methods. If the franchisee fails or refuses to make changes to the Franchised Business required to distinguish it from its former appearance, Auntie Annes has the right to enter the Accepted Location and make the required changes on the franchisee's behalf. The franchisee must pay Auntie Annes the entire costs incurred in making the changes, including interest from the date of demand, plus an administrative fee equal to 15% of the entire cost of the changes.
In addition, the franchisee must immediately return to Auntie Annes all hard copies and electronic copies of the Confidential Information and Trade Secrets, including the Manuals, together with all copies of any of them, and all other manuals, records, files, instructions, correspondence and other materials relating to the operation of the Franchised Business. The franchisee must erase all copies of the Confidential Information, Trade Secrets, and Other Materials if they are on computer systems, e-mail accounts, or other digital storage systems or services. The franchisee must provide Auntie Annes with a certification attesting to the fact that all copies of the Confidential Information, Trade Secrets, and Other Materials in their control or the control of their officers, directors, owners, employees, agents, and representatives have been returned or destroyed.
Furthermore, within 5 days after expiration or termination, the franchisee must pay Auntie Annes and its affiliates the full amount owed to them. The franchisee must immediately stop identifying themselves in any way as an Auntie Annes franchisee or former franchisee and immediately comply with the restrictive covenants regarding confidential information and restrictive covenants.