Will Auntie Annes modify the Franchise Agreement to comply with SBA requirements for loan programs?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
e terms of Item 12 of the Disclosure Document and Section 4 (Reserved Rights) of the Franchise Agreement (as applicable), we will not compete unfairly with you within a reasonable area.
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- Notwithstanding the terms of Section 13.1 (Indemnification) of the Franchise Agreement, you will not be required to indemnify the Affiliated Parties for any liability caused by your proper reliance on or use of procedures or materials provided by us or caused by our negligence.
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- Section 15.4.B. (Restrictive Covenants: Post Term) of the Franchise Agreement is revised to limit the geographical extent of the post-term covenant not to compete to an area of reasonable size, for all franchises sold in the State of Indiana.
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- The prohibition by Indiana Code § 23-2-2.7-1(7) against unilateral termination of the franchise without good cause or in bad faith, good cause being defined therein as ". . . a material breach of the franchise agreement . . . ," supersede any contrary provisions contained in Section 17 (Default and Termination) of the Franchise Agreement in the State of Indiana.
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- The provisions of the Franchise Agreement relieving both parties from liability for punitive damages will not apply to franchises offered and sold in the State of Indiana.
MARYLAND ADDENDUM TO DISCLOSURE DOCUMENT
In recognition of the requirements of the Maryland Franchise Registration and Disclosure Law, the Disclosure Document for Auntie Anne's Franchisor SPV LLC for use in the State of Maryland is amended as follows:
ITEM 17 RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION:
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- No release language required on renewal, transfer, or signing the Franchise Agreement will relieve us or any other person, directly or indirectly, from liability imposed by the Maryland Franchise Registration and Disclosure Law.
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- No provision of the Disclosure Document or Franchise Agreement will be construed as a release, estoppel, or waiver by you of any liability we incur under the Maryland Franchise Registration and Disclosure Law.
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- Item 17.v. of this Disclosure Document is modified as follows:
- You can enter into litigation with us
Source: Item 10 — FINANCING (FDD page 61)
What This Means (2024 FDD)
Based on the 2024 Auntie Annes Franchise Disclosure Document, there is no explicit mention of modifying the Franchise Agreement to comply with SBA (Small Business Administration) requirements for loan programs. The FDD includes several addenda that modify the disclosure document and franchise agreement to comply with specific state laws, such as those in Maryland, Minnesota, Illinois, and Indiana. These addenda address specific legal requirements within those states, such as stipulations regarding liability, waivers, and governing law.
Item 22 details various contracts and agreements, including a Non-Disclosure and Confidentiality Agreement, which outlines the franchisee's obligations regarding confidential information. However, none of these sections address modifications for SBA loan compliance. The document also includes information about the franchisor's assistance, advertising, computer systems, and training, as well as details about site selection and the franchisee's obligations.
Given the absence of specific information regarding SBA loan compliance modifications, prospective Auntie Annes franchisees should directly inquire with the franchisor about their policies and practices related to SBA loan requirements. This inquiry should clarify whether Auntie Annes is willing to modify the Franchise Agreement to meet SBA requirements and what specific accommodations they can provide to facilitate SBA loan approval. Understanding this aspect is crucial for franchisees who plan to seek SBA funding to finance their franchise venture.