Does Auntie Annes have sole discretion in granting the right to lease and operate an SRU?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
hat you will have to satisfy the transfer procedures for both us (as set forth in this Agreement) and the Co-Branded Franchisor (as set forth in your Co-Branded Agreement), including the right to approve the Transfer and the proposed transferees and payment of any transfer fees due under each agreement.
- J. Section 17.2 (Our Termination: No Opportunity to Cure) is amended by adding the following new Section 17.2.M.:
- 17.2.M. Your Co-Branded Agreement terminates or expires or you for any other reason cease to operate the Co-Branded Franchise at the Accepted Location.
[SCHEDULE A SIGNATURE PAGE FOLLOWS]
Signature Page for Schedule A (Franchise Specific Terms)
Auntie Anne's Franchisor SPV LLC «Z1_First_Name»: «Z1_Last_Name» By: Name: Title: Date: By: Name: «Signee_1_name» «Z1_State_of_Formation» Title: «Signee_1_title» «Z1_State_of_Formation» Date: L.S. Name: «Signee_2_name» Title: «Signee_2_title» L.S. Name: «Signee_3_name» Title: «Signee_3_title»
| Auntie Anne's SRU No |
|---|
| AUNTIE ANNE'S SATELLITE RETAIL UNIT ADDENDUM |
| This Addendum (the "SRU Addendum") is signed as of, 20 |
| (the "SRU Addendum Date") between Auntie Anne's Franchisor SPV LLC, a Delaware limited |
| liability |
| company |
| ("we" |
| or |
| "us") |
| and |
| «Z1_First_Name» |
| «Z1_Last_Name», |
| a |
| «Z1_State_of_Formation» |
| «Z1_Entity_Type», |
| «Z2_First_Name» |
| «Z2_Last_Name», |
| a |
| «Z2_State_of_Formation» |
| «Z2_Entity_Type»«Z3_First_Name» |
| «Z3_Last_Name», |
| a |
| «Z3_State_of_Formation» |
| «Z3_Entity_Type»«Z4_First_Name» |
| «Z4_Last_Name», |
| a |
| «Z4_State_of_Formation» «Z4_Entity_Type»«Z5_First_Name» |
| «Z5_Last_Name» ("you"). |
| BACKGROUND: |
| A. We and you entered into a franchise agreement dated (the |
| "Franchise Agreement"), whereby we granted and you accepted a license to operate a Auntie |
| Anne's® |
| shop No. «Store_Number» located at «location_name», «store_street_address», |
| «store_city», «store_state» «store_zip». |
| B. We and you desire to amend the Franchise Agreement on the terms outlined below to |
| allow you to operate a satellite retail unit (a "SRU"). |
| NOW THEREFORE, in consideration of the premises and for other good and valuable |
| consideration, the parties agree as follows: |
| 1. Section 1.1 (Grant of Franchise) of the Franchise Agreement is deleted and replaced with |
| the following: |
| 1.1 Grant of Franchise. Subject to the terms of this Agreement, we grant to you, and you |
| accept, a non-exclusive license to operate one Business using the Marks and the System |
| (collectively, your "Franchised Business"). Unless we authorize you to operate a satellite |
| retail unit (a "SRU"), the Franchised Business will be operated only at the location specified |
| in Schedule A (the "Accepted Location") or, if we have |
| not yet accepted a site for the |
| Franchised Business as of the date of this Agreement, at a location that |
| we have |
| accepted in accordance with this Agreement within the geographic area specified in |
| Schedule A (the "Site Selection Area"). If we approve you to operate an SRU, you may |
| engage in certain, but not all, of the activities contemplated by this Agreement from a |
| location that we specify (the "SRU Location"). The SRU will also be considered part of |
| the definition of Franchised Business. |
| 2. Section 3.2.C. (Net Sales) of the Franchise Agreement is amended by adding the following: |
| For the avoidance of doubt, "Net Sales" includes all revenues generated from an SRU. |
SRU Location: ___________________________.
following:
- Section 5.1 (Accepted Location) of the Franchise Agreement is amended by adding the
We approve you to sell a limited selection of Approved Products in an SRU at the following
- **Section 5.4.A.
Source: Item 10 — FINANCING (FDD page 61)
What This Means (2024 FDD)
According to the 2024 Auntie Annes Franchise Disclosure Document, Auntie Annes retains authority over granting franchisees the right to operate a Satellite Retail Unit (SRU). Specifically, Section 1.1 of the Franchise Agreement states that the franchisee's business will be operated at the location specified in Schedule A or at a location that Auntie Annes has accepted. If Auntie Annes approves a franchisee to operate an SRU, the franchisee may engage in certain activities from a location that Auntie Annes specifies. This indicates that the grant to operate an SRU is not automatic and is subject to Auntie Annes's approval.
Furthermore, the SRU Addendum outlines that Auntie Annes, referred to as "we" or "us," and the franchisee, referred to as "you," enter into an agreement to amend the Franchise Agreement to allow the franchisee to operate an SRU. This amendment is not unilaterally decided by the franchisee but requires mutual agreement. The addendum emphasizes that unless Auntie Annes authorizes the operation of an SRU, the franchised business will be operated only at the accepted location.
Additionally, the document states that Auntie Annes leases carts and equipment to franchisees participating in the SRU program, further solidifying their control over the SRU operations. The lease agreement between Lessor (Auntie Anne's) and Lessee (franchisee) specifies that the rights to lease the SRU are subject to the terms of the Franchise Agreement. This clause ensures that Auntie Anne's maintains ultimate control over the SRU, and any conflicts between the lease agreement and the Franchise Agreement will be resolved in favor of the Franchise Agreement. Therefore, franchisees need to obtain explicit authorization from Auntie Annes to operate an SRU, and Auntie Annes has the discretion to specify the location and terms of operation.