After assignment of the Anago Subfranchise Agreement, is the ASSIGNOR still bound by the terms of the Subfranchise Agreement?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
Agreement to ASSIGNEE, subject to the terms and conditions of this Assignment, including, without limitation, ASSIGNOR's agreement to guarantee the performance by ASSIGNEE of its obligations under the Subfranchise Agreement and to continue to be bound by all the provisions
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- ASSIGNOR agrees that ASSIGNOR shall continue to be bound by all of the terms, covenants, conditions and obligations of Subfranchisor under the Subfranchise Agreement, including, without limitation, all non-competition, confidentiality and indemnification obligations, and that nothing contained in this Assignment herein shall be deemed to relieve ASSIGNOR of any of ASSIGNOR's obligations in the Subfranchise Agreement. ASSIGNOR further agrees to execute FRANCHISOR's form of personal guaranty, simultaneously with the execution of this Assignment.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, if a subfranchisee (the assignor) assigns their Subfranchise Agreement to another party (the assignee), the assignor remains bound by the terms of the agreement. Specifically, the assignor agrees to guarantee the performance of the assignee's obligations and continues to be bound by all provisions of the Subfranchise Agreement. This ensures that Anago retains recourse against the original subfranchisee even after the assignment.
This continued obligation includes, but is not limited to, all non-competition, confidentiality, and indemnification obligations outlined in the original Subfranchise Agreement. Furthermore, the assignor must execute Anago's form of personal guaranty at the time of the assignment, reinforcing their commitment. This requirement protects Anago by ensuring that the original subfranchisee remains liable for certain aspects of the agreement, even after transferring the rights and responsibilities to another party.
This provision is significant for prospective Anago subfranchisees considering assigning their agreements, as they will not be fully released from their obligations. They will need to carefully consider the assignee's ability to fulfill the terms of the agreement, as the assignor will remain responsible if the assignee fails to meet those obligations. This clause aims to mitigate risks for Anago by maintaining accountability even after an assignment occurs.