What constitutes a non-curable default related to criminal activity by an Anago subfranchisee or their personnel?
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; | |----------------------------------------------------|----------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| i. Franchisee's obligations on termination / non renewal | ARTICLE 9, Subsection 10.2(b) and Section 11.2 | You must: 1.
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, certain criminal activities by a subfranchisee or their personnel constitute non-curable defaults under the Subfranchise Rights Agreement. Specifically, if the subfranchisee, or any of their officers, directors, owners, or employees, is charged with, pleads guilty or no contest to, or is convicted of a felony, a crime involving moral turpitude, or any other offense that could materially and adversely affect the Anago system or its proprietary marks, it is considered a non-curable default. This means Anago can terminate the agreement without providing an opportunity to correct the issue.
This provision is significant for prospective Anago subfranchisees because it highlights the importance of maintaining a clean criminal record and ensuring that all personnel associated with the subfranchise do as well. Any involvement in criminal activity, even if it doesn't directly relate to the Anago business, could lead to the termination of the subfranchise agreement. The broad language covering "any other offense that might have a materially adverse affect on the System or the Proprietary Marks" gives Anago considerable discretion in determining what constitutes a terminable offense.
In the franchise industry, it is common for franchisors to include clauses that allow for termination in the event of criminal activity or actions that could harm the brand's reputation. This is to protect the overall integrity of the franchise system. However, the specific definitions and consequences can vary from franchise to franchise. Therefore, prospective Anago subfranchisees should carefully review this section of the Subfranchise Rights Agreement and seek legal counsel to fully understand their rights and obligations.