What constitutes a material breach of obligations to Unit Franchisees that could result in Anago terminating the Subfranchise Agreement?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
(j) If Franchisor has received more than three complaints from Unit Franchisees in the Area in a 12-month period, or more than two complaints from Unit Franchisees in the Area in a 6 month period that, in the reasonable discretion of Franchisor, are justified and are adversely affecting the System;
(k) If Subfranchisor fails to comply with the in-term covenants set forth in Section 10.2 of this Agreement;
(l) If Subfranchisor misuses or makes any unauthorized use of the Proprietary Marks or any other identifying characteristics of the System, or otherwise materially impairs the goodwill associated therewith or Franchisor's rights therein; or
(m) If Subfranchisor fails to comply with any provision of this Agreement on two (2) or more occasions during any consecutive six-month period or on three (3) or more occasions during any consecutive twelve-month period, regardless of whether Franchisor notified Subfranchisor of such defaults and whether the defaults were cured by Subfranchisor.
(n) If Subfranchisor fails to use the proprietary software or systems as directed by the Franchisor.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, several actions can lead to the termination of the Subfranchise Agreement due to a material breach of obligations to Unit Franchisees. These include receiving more than three justified complaints from Unit Franchisees in the Area within a 12-month period, or more than two such complaints within a 6-month period, if Anago reasonably believes these complaints are adversely affecting the Anago system.
Additionally, Anago may terminate the agreement if the Subfranchisor fails to comply with the in-term covenants outlined in Section 10.2 of the agreement. Misusing Anago's Proprietary Marks or any identifying characteristics of the system, or otherwise materially impairing the goodwill associated with them, also constitutes grounds for termination.
Furthermore, repeated non-compliance with any provision of the agreement can lead to termination. Specifically, failing to comply with any provision of the agreement on two or more occasions during any consecutive six-month period, or on three or more occasions during any consecutive twelve-month period, regardless of whether Anago notified the Subfranchisor of such defaults or whether the defaults were cured, can result in termination. Finally, failure to use the proprietary software or systems as directed by Anago is also grounds for termination.