In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Annex Brands franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for an Annex Brands franchise, based on Item 7 of the company’s 2021 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for an Annex Brands franchise, based on Items 5 and 6 of the company’s 2021 FDD

• Section IV – Number of franchised and company-owned Annex Brands outlets at the start of the year and the end of the year for 2018, 2019, and 2020, based on Item 20 of the company’s 2021 FDD

• Section V – Presentation and analysis of Annex Brands’ financial performance representations, based on Item 19 of the company’s 2021 FDD, including information on the:

• fiscal year 2020 average, median, highest, and lowest gross sales for the upper 50%, lower 50%, and all 269 franchised PostalAnnex/PostalAnnex+ centers that had been in operation for 12 months or more as of September 30, 2020 and that had represented the principal operating activity at their business locations

• fiscal year 2020 average, median, highest, and lowest gross sales for the upper 50%, lower 50%, and all 520 franchised Annex Brands centers (PostalAnnex/PostalAnnex+, Pak Mail, AIM Mail, Parcel Plus, Handle With Care Packaging Store, and Sunshine Pack & Ship) that had been in operation for 12 months or more as of September 30, 2020 and that had represented the principal operating activity at their business locations

• fiscal year 2020 gross sales for the 1 company-owned Annex Brands center (Pak Mail) that had been in operation for 12 months or more as of September 30, 2020

Section I – Background Information

16 Things You Need to Know About the Annex Brands Franchise

Announces Company Promotions and Retirements

1.  In early January 2021, Annex Brands announced several staff changes at its San Diego headquarters. Michelle McKee has joined the company as executive director of marketing. She has over 20 years of experience across several industries including 10+ years in franchise brands such as Jack in the Box, Flippin’ Pizza, and Sport Clips. Prior to joining Annex Brands, Michelle led the in-house agency at Belmont Park, an amusement and entertainment park in San Diego, California.

2.  McKee succeeds Chief Brand Officer Steve Goble who retired from the private sector in January, 2021 after 21 years with the company: 6+ as a PostalAnnex+ franchisee and 15 leading the marketing department. Goble was recently re-elected as a councilmember in the City of El Cajon where he will continue in public service in local and regional agencies.

3.  Ryan Heine has been promoted to senior vice president of franchising and marketing. Heine has been with Annex Brands for over 18 years, building the Franchising department and now overseeing the Marketing group, as well.

4.  Chris Kimball has been promoted to vice president of real estate and leasing. Kimball has been with Annex Brands for over 15 years, providing the connection between franchisees and landlords, management companies, and developers.

5.  TanaSue Carpenter has been promoted to vice president of finance. Carpenter has been with Annex Brands for over 8 years, leading the Accounting department. She is a licensed CPA in the state of California.

Navis Pack and Ship Franchisee Featured in Local Magazine

6.  In April 2020, Spotlight News Magazine – which covers the people of the Naples, Bonita Springs, and Estero, Florida areas – covered the story of Andy Ahrens and his wife Wendy, owners of a Navis Pack and Ship franchise. The franchise specializes in personal, professional care targeted to fragile, valuable, and heirloom treasures whether shipped locally or abroad.

7.  Andy Ahrens said, “We like to regard ourselves as a little mom and pop business.” Ahrens and his wife put their personal expertise on the line for every item they pack and ship, held to a high standard as partners in the franchise they purchased in 2018.

8.  Originally from Milwaukee, Wisconsin, Ahrens and his wife were looking for a change. “We wanted a unique franchise – without a lot of moving parts, unique, boutique, and under the radar that could not be easily replaced by Amazon,” said Ahrens. Enjoyable was part of their equation. According to Ahrens, not only has it been fun, but also a growth experience.

9.  “Wendy is so knowledgeable about fine furniture and the items we pack and ship that she has a positive relationship with customers. That means a lot to me and to the business,” said Ahrens. He said she is also an expert at the details of international and domestic shipping.

10.  When Ahrens mentions shipping valuables, he means the affluent world of high value. He shipped a coffee table recently that has been in two generations and means a lot to the family. A month ago he packed and shipped a $900,000 Marc Chagall painting to New York City. A closing office had him pack and ship their computers to Detroit. A medical lab needed to ship medical devices overseas; they weighed a ton each and required special packaging – and a crane.

11.  Most common are the estate distributions where most of the household items have been sold. Ahrens is called in to pack and ship the sentimental pieces that may have both monetary and sentimental value. Handling a range from single items to entire households with custom packing and shipping that avoids loss requires hands-on management. Employees at the Fort Myers warehouse work to the same high standards as the Navis owners.

12.  With a 5-star Google rating and a business that is growing to include other cities, Ahrens believes he made the right choice of franchise. He consults with customers at their residences and assures them that their priceless grandfather clocks, china, chandeliers, artwork, antiques, sentimental furniture pieces, heirlooms, and fragile items will safely reach their destination, often with white glove treatment, whether across town or to a chalet in France.

Company History

13.  Annex Brands started out in 1985 as PostalAnnex+, which was founded by Jack Lentz near San Diego, California. At the time, Lentz noticed that there was no other mail and parcel center offering a complete line of small office and home-based office services under one roof. The first PostalAnnex+ was a hit and Lentz opened three more stores by the end of that first year. Building on this success, Lentz started franchising PostalAnnex+ in 1986 and over the next few decades, the company grew to a few hundred locations.

14.  In 2006, PostalAnnex+ decided that the best way to expand further would be through acquisition. That same year, PostalAnnex+ acquired Florida-based Sunshine Pack & Ship retail and commercial shipping centers. The Sunshine acquisition provided new opportunities with the shipping of large, fragile, and valuable items through its logistics and van line operations. Over the next few years, PostalAnnex+ made several more acquisitions, including Handle With Care Packaging Store, Navis Pack & Ship, AIM Mail Center, Parcel Plus, and Pak Mail Centers of America, Inc.

15.  In 2007, the company changed its name to Annex Brands. After several of these acquisitions, Annex Brands started the Annex Copy Center in 2012, as a full-service copy and print center. Today, Annex Brands has locations around the world.

Entrepreneur’s Franchise 500

16.  PostalAnnex+ ranked No. 231 on Entrepreneur’s 2021 Franchise 500 list. It is the only brand from Annex Brands to rank on this year’s list.

Section II – Estimated Costs

• Please click here for detailed estimates of Annex Brands franchise costs, based on Item 7 of the company’s 2021 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Annex Brands’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2021 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2018

• Outlets at the Start of the Year:  272
• Outlets at the End of the Year:  276
• Net Change:  +4

2019

• Outlets at the Start of the Year:  276
• Outlets at the End of the Year:  279
• Net Change:  +3

2020

• Outlets at the Start of the Year:  279
• Outlets at the End of the Year:  292
• Net Change:  +13

Company-Owned

2018

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2019

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

2020

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2021 FDD) and Analysis

• “Gross Sales” include all revenue for products and services sold to customers, including products and services with higher margins such as shipping services (including ground, next day, freight, and custom packaging), faxes, copies and metered postage, and products and services with lower margins such as postage stamps, but exclude:

• (i) sales, use, or service taxes collected and paid to appropriate taxing authorities;
• (ii) customer refunds and adjustments;
• (iii) the cost of electronic funds transfers for resale;
• (iv) the cost of money orders for resale;
• (v) utility funds collected;
• (vi) the cost of lottery tickets for resale and phone cards for resale;
• (vii) the cost of 3rd party truck rental sales;
• (viii) the cost of eBay sales; and
• (ix) the cost of ancillary fees paid to the appropriate government agencies to process fingerprinting, LiveScan, and passports.

• Annex Brands franchisees pay royalty fees and marketing fees based on Gross Receipts (defined in Item 6), which are calculated by excluding the cost of metered postage and postage stamps from Gross Sales.

• Both Gross Sales and Gross Receipts include fees and commissions generated from electronic funds transfers, money order sales, utility collections, lottery ticket sales, phone card sales, 3rd party truck rental sales, fingerprinting, LiveScan, passport services, and eBay sales.

• Annex Brands reserves the right periodically, in its sole discretion, to add additional exclusions to the list above as new programs, products, or services are established, or as changes to existing programs, products, or services are established, as specified in the Manuals or otherwise in writing.

• The mix of postal, printing and copying, packaging and shipping, and business support services offered to the public by each individual center varies at the discretion of each franchisee.

• The Gross Sales attainable by a franchisee are largely dependent on the type and quality of service offered to the public, and individual sales and marketing efforts.

• An “average” is calculated by adding the numerical values of all data points in a set, and dividing by the number of data points in the set.

• A “median” is the numerical value of the data point in the middle of all data points in a set. If a set contains an even number of data points, the median is calculated by identifying the 2 data points in the middle of the set, adding their numerical values, and dividing by 2.

Part 1 – Annual Gross Sales for the Fiscal Year Ended September 30, 2020 of PostalAnnex/PostalAnnex+ Centers in Operation 12 Months or More as of September 30, 2020

• As of September 30, 2020, there were 292 PostalAnnex/PostalAnnex+ centers in operation, for a total of 292 PostalAnnex/PostalAnnex+ franchised centers.

• The averages, ranges, and medians below are based on the actual Gross Sales, for the fiscal year ended September 30, 2020, of the 269 PostalAnnex/PostalAnnex+ franchised centers that had been in operation for 12 months or more as of September 30, 2020 (17 franchised centers were excluded for this reason), and that had represented the principal operating activity at their business locations (6 express centers were excluded for this reason).

All Franchised

• Number of Centers:  269
• Average Annual Gross Sales:  $352,000
• Range of Annual Gross Sales:  $44,000 to $1,279,000
• Median Annual Gross Sales:  $324,000
• 114 or 42% of all 269 franchised centers met or exceeded the average annual Gross Sales figure of $352,000.

Upper 50% Franchised

• Number of Centers:  134
• Average Annual Gross Sales:  $482,000
• Range of Annual Gross Sales:  $327,000 to $1,279,000
• Median Annual Gross Sales:  $451,000
• 52 or 39% of the 134 franchised centers in the upper 50% of annual Gross Sales met or exceeded the average annual Gross Sales figure of $482,000.

Lower 50% Franchised

• Number of Centers:  135
• Average Annual Gross Sales:  $224,000
• Range of Annual Gross Sales:  $44,000 to $324,000
• Median Annual Gross Sales:  $246,000
• 76 or 56% of the 135 franchised centers in the lower 50% of annual Gross Sales met or exceeded the average annual Gross Sales figure of $224,000.

• In Annex Brands’ fiscal year ended September 30, 2020, 6 PostalAnnex/PostalAnnex+ centers ceased operations, 2 after being terminated and 4 for other reasons.

Part 2 – Annual Gross Sales for the Fiscal Year Ended September 30, 2020 of PostalAnnex/PostalAnnex+, Pak Mail, AIM Mail, Parcel Plus, Handle With Care Packaging Store, and Sunshine Pack & Ship Centers in Operation 12 Months or More as of September 30, 2020

• As of September 30, 2020, 292 PostalAnnex/PostalAnnex+ centers, 187 Pak Mail centers, 45 AIM Mail centers, 21 Parcel Plus centers, 9 Handle With Care Packaging Store centers, and 3 Sunshine Pack & Ship centers were in operation, for a total of 557 franchised centers and 1 company-owned Pak Mail center.

• The averages, ranges, and medians below are based on the actual Gross Sales, for the fiscal year ended September 30, 2020, of the 520 franchised centers that had been in operation for 12 months or more as of September 30, 2020 (18 franchised centers were excluded for this reason), and that had represented the principal operating activity at their business locations (19 express centers were excluded for this reason).

• The 1 company-owned Pak Mail center’s Gross Sales are not included in the averages, ranges, or medians for the franchised centers, but are shown separately in the chart below.

All Franchised

• Number of Centers:  520
• Average Annual Gross Sales:  $332,000
• Range of Annual Gross Sales:  $44,000 to $1,279,000
• Median Annual Gross Sales:  $306,000
• 221 or 43% of all 520 franchised centers met or exceeded the average annual Gross Sales figure of $332,000.

Upper 50% Franchised

• Number of Centers:  261
• Average Annual Gross Sales:  $459,000
• Range of Annual Gross Sales:  $306,000 to $1,279,000
• Median Annual Gross Sales:  $419,000
• 99 or 38% of the 261 franchised centers in the upper 50% of annual Gross Sales met or exceeded the average annual Gross Sales figure of $459,000.

Lower 50% Franchised

• Number of Centers:  259
• Average Annual Gross Sales:  $204,000
• Range of Annual Gross Sales:  $44,000 to $305,900
• Median Annual Gross Sales:  $212,000
• 139 or 54% of the 259 franchised centers in the lower 50% of annual Gross Sales met or exceeded the average annual Gross Sales figure of $204,000.

Company-Owned

• Number of Centers:  1
• Annual Gross Sales:  $614,000

•  In Annex Brands’ fiscal year ended September 30, 2020, 22 centers ceased operations, 2 after being terminated and 20 for other reasons.

Part 3 – Annual Gross Sales for the Fiscal Year Ended September 30, 2019 of PostalAnnex/PostalAnnex+ in Operation 12 Months or More as of September 30, 2019

• As of September 30, 2019, there were 279 PostalAnnex/PostalAnnex+ centers in operation, for a total of 279 PostalAnnex/PostalAnnex+ franchised centers.

• The averages, ranges, and medians below are based on the actual Gross Sales, for the fiscal year ended September 30, 2019, of the 262 franchised centers that had been in operation for 12 months or more as of September 30, 2019 (11 franchised centers were excluded for this reason), and that had represented the principal operating activity at their business locations (6 express centers were excluded for this reason).

All Franchised

• Number of Centers:  262
• Average Annual Gross Sales:  $336,000
• Range of Annual Gross Sales:  $37,000 to $1,200,000
• Median Annual Gross Sales:  $323,000
• 115 or 44% of all 262 franchised centers met or exceeded the average annual Gross Sales figure of $336,000.

Upper 50% Franchised

• Number of Centers:  131
• Average Annual Gross Sales:  $450,000
• Range of Annual Gross Sales:  $324,000 to $1,200,000
• Median Annual Gross Sales:  $416,000
• 45 or 34% of the 131 franchised centers in the upper 50% of annual Gross Sales met or exceeded the average annual Gross Sales figure of $450,000.

Lower 50% Franchised

• Number of Centers:  131
• Average Annual Gross Sales:  $223,000
• Range of Annual Gross Sales:  $37,000 to $322,000
• Median Annual Gross Sales:  $237,000
• 73 or 56% of the 131 franchised centers in the lower 50% of annual Gross Sales met or exceeded the average annual Gross Sales figure of $223,000.

• In Annex Brands’ fiscal year ended September 30, 2019, 9 PostalAnnex/PostalAnnex+ centers ceased operations, 1 after being terminated and 8 for other reasons.

Part 4 – Annual Gross Sales for the Fiscal Year Ended September 30, 2019 of PostalAnnex/PostalAnnex+, Pak Mail, AIM Mail, Parcel Plus, Handle With Care Packaging Store, and Sunshine Pack & Ship Centers in Operation 12 Months or More as of September 30, 2019

• As of September 30, 2019, 279 PostalAnnex/PostalAnnex+ centers, 198 Pak Mail centers, 46 AIM Mail centers, 22 Parcel Plus centers, 10 Handle With Care Packaging Store centers, and 3 Sunshine Pack & Ship centers were in operation, for a total of 558 franchised centers and 1 company-owned Pak Mail center.

• The averages, ranges, and medians below are based on the actual Gross Sales, for the fiscal year ended September 30, 2019, of the 525 franchised centers that had been in operation for 12 months or more as of September 30, 2019 (14 franchised centers were excluded for this reason), and that had represented the principal operating activity at their business locations (19 express centers were excluded for this reason).

• The 1 company-owned Pak Mail center’s Gross Sales are not included in the averages, ranges, or medians for the franchised centers, but are shown separately in the chart below.

All Franchised

• Number of Centers:  525
• Average Annual Gross Sales:  $313,000
• Range of Annual Gross Sales:  $37,000 to $1,251,000
• Median Annual Gross Sales:  $284,000
• 235 or 45% of all 525 franchised centers met or exceeded the average annual Gross Sales figure of $313,000.

Upper 50% Franchised

• Number of Centers:  263
• Average Annual Gross Sales:  $432,000
• Range of Annual Gross Sales:  $284,000 to $1,251,000
• Median Annual Gross Sales:  $387,000
• 91 or 34% of the 263 franchised centers in the upper 50% of annual Gross Sales met or exceeded the average annual Gross Sales figure of $432,000.

Lower 50% Franchised

• Number of Centers:  262
• Average Annual Gross Sales:  $193,000
• Range of Annual Gross Sales:  $37,000 to $283,000
• Median Annual Gross Sales:  $202,000
• 141 or 54% of the 262 franchised centers in the lower 50% of annual Gross Sales met or exceeded the average annual Gross Sales figure of $193,000.

Company-Owned

• Number of Centers:  1
• Annual Gross Sales:  $614,000

• In Annex Brands’ fiscal year ended September 30, 2019, 25 centers ceased operations, 1 after being terminated and 24 for other reasons.

• The Gross Sales figures reported above do not reflect cost of sales, payroll and related expenses, rent, office expenses, amortization, depreciation, income taxes, or similar expenses or debt service obligations.

• Annex Brands prepared the information above from sales reports submitted by the centers. Those reports are not audited, and Annex Brands has not undertaken to independently verify the accuracy of the information. However, Annex Brands knows of no instance in which, and has no reason to believe that, any centers overstated their Gross Sales or Gross Receipts in any reports.

• There are no material differences between the operations of, or the products or services offered by, the centers whose results are reported above, and the franchises Annex Brands currently offers, except that government laws and regulations and/or restrictions related to coronavirus are/may be impacting the performance of franchised centers in 2020.

• Some centers have sold this amount. Your individual results may differ. There is no assurance that you’ll sell as much.

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