What constitutes a transfer of interest in the Anago franchise agreement that requires franchisor consent?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
- (a) Personal Rights. The rights and duties stated in this Agreement are personal to You. We have granted the Unit Franchise in reliance on Your business and personal skill, reputation, aptitude and financial capacity. Accordingly, You agree that, unless otherwise expressly permitted by this Agreement, You will not sell, assign, transfer, convey or give voluntarily, involuntarily, directly or indirectly, by operation of law or otherwise (collectively "transfer") any direct or indirect interest in (1) this Agreement, (2) any Account or interest in any Account assigned to You under this Agreement or with respect to which you sign a joinder, or (3) the Unit Franchise without Our prior written consent (that may be granted or withheld by Us in Our sole discretion). However, Our written consent is not required for: (i) a transfer of less than a 5% interest in a publicly held corporation; or (ii) a transfer of all or any part of Your interest to one of Your other original shareholders or partners. A transfer of 25% or more of the voting or ownership interests in Your corporation, partnership or limited liability company, individually or in the aggregate, directly or indirectly, is, for all purposes of this Agreement, considered Your transfer of an interest in this Agreement. Any purported transfer by You, by operation of law or otherwise in violation of this Agreement, is void and is an Event of Default.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, the rights and duties within the franchise agreement are personal to the franchisee, as Anago has granted the franchise based on the franchisee's skills, reputation, aptitude, and financial capacity. Therefore, any direct or indirect interest in the agreement, any account assigned to the franchisee, or the unit franchise itself requires Anago's prior written consent to be sold, assigned, transferred, or conveyed. Anago has the sole discretion to grant or withhold this consent.
However, there are exceptions where Anago's written consent is not required. These include a transfer of less than a 5% interest in a publicly held corporation, or a transfer of interest to another original shareholder or partner of the franchisee. It's important to note that a transfer of 25% or more of the voting or ownership interests in the franchisee's corporation, partnership, or limited liability company, whether individually or in the aggregate, is considered a transfer of interest in the agreement, thus requiring Anago's consent.
Any transfer attempted by the franchisee, whether by law or otherwise, that violates the terms of the Anago franchise agreement is considered void and will constitute an event of default. This means that franchisees must be extremely careful when considering any changes to their business structure or ownership, as failure to obtain Anago's consent can have serious consequences.