What constitutes a default by Anago under the agreement?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
If You are in default We may, at Our option, terminate all rights granted to You under this Agreement, without affording You an opportunity to cure the default, effective immediately upon notice to You, upon the occurrence of any of the following Events of Default:
- (a) If You cease to perform contracted service to the Accounts for more than 3 consecutive days without Our consent;
- (b) If You fail or refuse to comply with any mandatory specification, standard or operating procedure We require in this Agreement, in the Manual or otherwise in writing, on the cleanliness or sanitation of the Anago Unit Franchise;
- (c) If You, or Your officer, director, owner or managerial employee is convicted of a felony, a crime of moral turpitude or any other crime or offense that We reasonably believe is likely to have a material adverse effect on the System, the Proprietary Property, the goodwill associated with the Proprietary Property, or Our interest in any of the Proprietary Property, unless You immediately and legally terminate the individual as an officer, director, owner and employee;
- (d) If You deny Us the right to inspect the Anago Unit Franchise or to audit the Records of the Anago Unit Franchise;
- (e) If You engage in conduct that is harmful to or reflects unfavorably on You or the System in that the conduct exhibits a reckless disregard for the physical or mental well-being of employees, Clients, Our representatives or the public at large, including battery, assault, sexual harassment or discrimination, racial harassment or discrimination, alcohol or drug abuse or other forms of threatening, outrageous or unacceptable behavior as determined in Our sole discretion;
- (f) If You, contrary to this Agreement, purport to encumber or transfer any rights or obligations under this Agreement (including transfers of any interest in You), without Our written consent;
- (g) If any breach occurs under Sections 6.2 or 13.1 concerning confidentiality and noncompetition covenants;
- (h) If You knowingly maintain false Records, or knowingly submit any false Records to Us;
- (i) If You misuse or make any unauthorized use of the Proprietary Property or otherwise materially impair the goodwill associated with the Proprietary Property or Our rights in the Proprietary Property;
- (j) If You receive from Us 3 or more Notices of Default for the same or similar defaults during any 12 consecutive months, even if all defaults were cured;
- (k) If You lose or voluntarily cease service to all Anago contracts You have agreed to service, and subsequently fail to complete corrective measures classes with 90 days of notice to
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, there are several events that can trigger a default under the agreement, some of which allow Anago to terminate the agreement without allowing an opportunity to cure the default. These include ceasing to perform contracted services for more than 3 consecutive days without Anago's consent, failing to comply with mandatory specifications or operating procedures related to cleanliness and sanitation, or if the franchisee or their officer, director, owner, or managerial employee is convicted of a felony or a crime that could negatively impact Anago's system or goodwill. Other causes for immediate termination include denying Anago the right to inspect the franchise or audit records, engaging in harmful conduct that reflects poorly on the system, or improperly transferring rights or obligations under the agreement.
Additionally, a default can occur if the franchisee breaches confidentiality or non-competition covenants, knowingly maintains false records, misuses Anago's proprietary property, or receives three or more notices of default for similar issues within a 12-month period, even if the defaults were cured. Further, defaulting includes losing or voluntarily ceasing service to all Anago contracts and failing to complete corrective measures classes within 90 days of notice, stopping service to assigned contracts and declining all subsequent contract offers for 360 days after the last service date, or if Anago cannot contact the franchisee because they vacated their premises without informing the local Anago office.
Anago can terminate the agreement if a serious threat to public health or safety arises from the franchise's operation and remains uncorrected for 5 days after written notice. Similarly, violating health, safety, or sanitation laws without correction within 3 days of notice also constitutes a default. For other defaults, the franchisee typically has 30 days to remedy the issue after receiving written notice. The franchisee bears the responsibility of proving that any default has been properly and promptly cured, to the extent that a cure is permitted under the agreement.
These provisions highlight the importance of adhering to Anago's standards and maintaining open communication with the franchisor. Prospective franchisees should carefully review these default conditions to understand their obligations and the potential consequences of non-compliance. Understanding these terms is crucial for maintaining a successful and compliant Anago franchise.