Does the definition of 'Business Assets' for Anago include intangible rights related to the agreement?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Debtor grants to Secured Party a first priority security interest in Debtor's Business Assets (the "Collateral"). For purposes of this Agreement, Debtor's "Business Assets" shall mean: (a) all of Debtor's accounts receivable arising out of, or in connection with, the operation of Debtor's Anago Subfranchise Business, existing as of the date of this Agreement and which come into existence during the Term of the Anago Subfranchise Rights Agreement by and between Debtor and Secured Party, including notes, negotiable instruments, contracts and the Unit Franchisee obligations for the payment of money, all client accounts and their account receivables, all proceeds owing from trips, clubs, parties, lessons, video studies and any other services or activities connected with the operation of the Subfranchise Business (the "Accounts Receivable"); (b) all books and records pertaining to the Debtor's Accounts Receivable; (c) all equipment, furniture and fixtures located at any owned or controlled site of Debtor; (d) all contracts related to each and every Business within the Area including all Anago Unit Franchise Agreements, promissory notes and any leases to which Debtor is a party; (e) all intangible rights related to this Agreement and the Subfranchise Business; and (f) all proceeds upon sale or other disposition of any of the foregoing. The capitalized terms in this Agreement shall have the meanings defined herein and in the Subfranchise Rights Agreement by and between Debtor and Secured Party.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, the definition of 'Business Assets' does include intangible rights related to the Subfranchise Rights Agreement. Specifically, the agreement between the debtor (franchisee) and secured party (Anago) grants a first priority security interest in the debtor's business assets as collateral. This collateral encompasses various elements, including intangible rights related to the agreement and the subfranchise business.
This means that Anago has a secured interest in these intangible rights, which could include things like the value of the franchise agreement itself, goodwill, and other non-physical assets associated with the business. This security interest helps protect Anago's investment in the franchise system and ensures that the franchisee fulfills their obligations under the Subfranchise Rights Agreement.
For a prospective franchisee, this implies that these intangible rights can be used as collateral. If the franchisee defaults on their obligations, Anago can claim these rights as part of their recovery process. It is important for potential franchisees to understand the full scope of what constitutes 'Business Assets' and how this security interest could impact their business.