According to the Anago franchise agreement, what constitutes a 'transfer' of the agreement?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) Personal Rights. The rights and duties stated in this Agreement are personal to You. We have granted the Unit Franchise in reliance on Your business and personal skill, reputation, aptitude and financial capacity. Accordingly, You agree that, unless otherwise expressly permitted by this Agreement, You will not sell, assign, transfer, convey or give voluntarily, involuntarily, directly or indirectly, by operation of law or otherwise (collectively "transfer") any direct or indirect interest in (1) this Agreement, (2) any Account or interest in any Account assigned to You under this Agreement or with respect to which you sign a joinder, or (3) the Unit Franchise without Our prior written consent (that may be granted or withheld by Us in Our sole discretion). However, Our written consent is not required for: (i) a transfer of less than a 5% interest in a publicly held corporation; or (ii) a transfer of all or any part of Your interest to one of Your other original shareholders or partners. A transfer of 25% or more of the voting or ownership interests in Your corporation, partnership or limited liability company, individually or in the aggregate, directly or indirectly, is, for all purposes of this Agreement, considered Your transfer of an interest in this Agreement. Any purported transfer by You, by operation of law or otherwise in violation of this Agreement, is void and is an Event of Default.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, a 'transfer' encompasses various scenarios where the franchisee relinquishes their interest in the franchise agreement, accounts, or the unit franchise itself. Specifically, any sale, assignment, transfer, conveyance, or giving away of direct or indirect interest, whether voluntary, involuntary, directly, or indirectly, or by operation of law, is considered a transfer. Anago must provide prior written consent for such transfers, which they may grant or withhold at their discretion.
However, there are exceptions to this rule. A transfer of less than 5% interest in a publicly held corporation does not require Anago's written consent. Similarly, a transfer of interest to another original shareholder or partner is also exempt from requiring written consent. It's important to note that a transfer of 25% or more of the voting or ownership interests in the franchisee's corporation, partnership, or limited liability company, whether individually or in the aggregate, is considered a transfer of interest in the agreement, requiring Anago's consent.
Furthermore, any attempt to transfer the agreement in violation of these terms is considered void and constitutes an event of default under the Anago franchise agreement. This means Anago could take action against the franchisee for non-compliance. This clause ensures that Anago maintains control over who operates an Anago Unit Franchise and protects the integrity of the brand. Prospective franchisees should carefully consider these transfer restrictions and discuss any potential future transfer plans with Anago before signing the franchise agreement.