What is the dependency between the Anago franchisee's transfer request and their compliance with the franchise agreement?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
notice of the assignment and assumption, You agree within 7 days of a request to sign a release of Us except for any liabilities from which We may not be released under any applicable law. We can also transfer Our stock, engage in public and private securities offerings, merge, consolidate, acquire other businesses including Competitive Businesses, sell all or substantially all of Our assets, borrow money (secured or unsecured), deal in Our assets or otherwise operate Our business without Your consent.
SECTION 10.2 YOUR TRANSFER.
- (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.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, a franchisee's ability to transfer their franchise is contingent upon compliance with the existing franchise agreement. Specifically, any attempt to transfer the franchise in violation of the agreement is considered void and constitutes an event of default. This means that if a franchisee is not in good standing or has breached the agreement, Anago can prevent the transfer from occurring.
Anago emphasizes that the rights and duties within the franchise agreement are personal to the franchisee, and the franchise was granted based on the franchisee's skills, reputation, and financial capacity. Therefore, Anago retains the right to approve or deny any transfer request at its sole discretion. This provision protects Anago's interests by ensuring that any new franchisee meets their standards and is capable of fulfilling the obligations of the franchise agreement.
Furthermore, even if Anago approves a transfer, this does not waive any existing claims Anago may have against the original franchisee, nor does it waive Anago's right to demand exact compliance with the agreement from the new franchisee. The original franchisee remains liable for any breaches or conduct before the transfer. This ensures that Anago can pursue any outstanding issues with the original franchisee, regardless of the transfer. The new franchisee must also demonstrate that they can comply with all obligations under the agreement to Anago's satisfaction.