For Anago, what is the consequence of selling a substantial portion of your assets after levy?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
n notice from us of the default. | | 5. Appointment of a receiver or custodian; | | |---|---| | 6. Filing for composition with creditors; | | | 7. Judgment of $5,000 | or more remains | | h. "Cause" defined – non-curable defaults | Sections 8.1 and 8.2 | The following defaults may not be cured: 1. Insolvency or general assignment for creditors; 2. Filing in bankruptcy that is not dismissed within 45 days; 3. Adjudication of bankruptcy; 4. Filing for appointment of a receiver or custodian; 5. Appointment of a receiver or custodian; 6. Filing for composition with creditors; 7. Judgment of $5,000 or more remains unsatisfied for 30 days or longer; 8. Execution of levy; 9. Filing of foreclosure suit that is not dismissed within 45 days; 10. Sale of a substantial portion of your assets after levy; 11. Failure to complete training; 12. Knowing or willful violations of laws, rules or regulations, the commission of an illegal act in connection with the sale of a franchise, act of dishonesty, etc.; 13. You or any of your officers, directors, or owners or employees is charged with, pleads guilty or no contest to, or is convicted of a felony, crime or moral turpitude or any other offense that might have a materially adverse affect on the System or the Proprietary Marks; 14. You deny us our right of inspection or audit; 15. Material breach of any obligation to your Unit Franchisees in the Area; 16. You commit any acts involving dishonesty, bad faith, misfeasance, malfeasance, or willful misconduct; 18. Unauthorized assignment or transfer; 19. Breach of confidentiality or non competition provisions of your Subfranchise Rights Agreement; 20. You knowingly maintain false books or records; 21. Repeated complaints from Unit Franchisees in your Area; 22. Failure to achieve Minimum Annual Performance Requirements; 23. Failure to comply with in-term restrictive covenants; | |----------------------------------------------------|----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 44–52)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, selling a substantial portion of your assets after a levy constitutes a non-curable default under the Subfranchise Rights Agreement. This means that Anago can terminate the agreement with you, and you will not have an opportunity to correct the situation.
Other non-curable defaults that could lead to termination of the Anago agreement include insolvency, filing for bankruptcy that is not dismissed within 45 days, adjudication of bankruptcy, filing for appointment of a receiver or custodian, appointment of a receiver or custodian, filing for composition with creditors, a judgment of $5,000 or more that remains unsatisfied for 30 days or longer, execution of levy, filing of foreclosure suit that is not dismissed within 45 days, failure to complete training, knowing or willful violations of laws, rules or regulations, the commission of an illegal act in connection with the sale of a franchise, act of dishonesty, etc., you or any of your officers, directors, or owners or employees is charged with, pleads guilty or no contest to, or is convicted of a felony, crime or moral turpitude or any other offense that might have a materially adverse affect on the System or the Proprietary Marks, you deny us our right of inspection or audit, material breach of any obligation to your Unit Franchisees in the Area, you commit any acts involving dishonesty, bad faith, misfeasance, malfeasance, or willful misconduct, unauthorized assignment or transfer, breach of confidentiality or non competition provisions of your Subfranchise Rights Agreement, you knowingly maintain false books or records, repeated complaints from Unit Franchisees in your Area, failure to achieve Minimum Annual Performance Requirements, and failure to comply with in-term restrictive covenants.
This is a significant risk for prospective Anago franchisees. It highlights the importance of maintaining sound financial management and adhering to all legal and contractual obligations. Franchisees should ensure they understand all the conditions that could lead to a non-curable default and take steps to avoid such situations. This clause is not uncommon in franchise agreements, as franchisors need to protect their brand and system standards. However, the breadth of potential non-curable defaults underscores the need for careful compliance and risk management on the part of the franchisee.