To whom does Anago distribute Escrow Receipts during a franchisee's default period?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
(i) During any period that you are in default of the Subfranchise Rights Agreement but the Subfranchise Rights Agreement is not terminated, and for 90 days, or more, thereafter (the "Default Period"), we may deposit and hold in the Anago Escrow Account certain client receipts (the "Escrow Receipts"), less any funds owed to us or our affiliates for Royalties, Administrative Support fees, Insurance fees, accounting fees, service fees (bank fees, credit card fees, or other fees relating to billing and collections), advertising fees, late fees, temporary management fees, interest, and any other payments due to Franchisor its affiliates hereunder. The Escrow Receipts may be held by us and distributed directly to the Unit Franchisees to ensure timely and accurate payment. We will pay directly to each Unit Franchisee the Escrow Receipt owed; less amounts due as delineated in the Unit Franchise Agreement. Your residual amounts may remain in the Anago Escrow Account for the duration of the Default Period, and may be offset by amounts owed to us. We will be obliged to pay each Unit Franchisee only for receipts that we/you deposit into the Anago Escrow Account. Each Escrow Receipt will be credited for the invoice the client designates, and will be distributed to the Unit Franchisee accordingly. If we determine, that you have collected a client receipt and subsequently failed to pay the corresponding Unit Franchisee timely pursuant to the terms of the Unit Franchise Agreement, then we may pay the amount owed to the Unit Franchisee directly. We will deduct and offset the same amount from the Anago Escrow Account. We may independently consult with each Unit Franchisee and client to determine the amount of funds the Unit Franchisee is owed. During the Default Period, you agree to cooperate fully with us to expedite full and timely payment to each Unit Franchisee. You will furnish to us, within 48 hours of our request, a copy of all prior client invoices regarding services and supplies provided to all your clients and Unit Franchisees.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS AND TRAINING (FDD pages 27–36)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, during a franchisee's default period, Anago may deposit client receipts into an escrow account. These Escrow Receipts, less any funds owed to Anago or its affiliates for various fees, may be distributed directly to the Unit Franchisees to ensure they receive timely and accurate payments. Anago will pay each Unit Franchisee the Escrow Receipt owed, after deducting amounts due as specified in the Unit Franchise Agreement.
The remaining amounts after payments to Unit Franchisees may stay in the Anago Escrow Account for the duration of the default period and can be used to offset any amounts the franchisee owes to Anago. Anago is only obligated to pay Unit Franchisees for receipts that are deposited into the Anago Escrow Account. Each Escrow Receipt will be credited for the invoice the client designates and distributed to the corresponding Unit Franchisee.
If Anago determines that a franchisee has collected a client receipt but failed to pay the Unit Franchisee on time, Anago may directly pay the amount owed to the Unit Franchisee. This amount will then be deducted from the Anago Escrow Account. Anago may also independently consult with each Unit Franchisee and client to determine the amount of funds owed to the Unit Franchisee. During this default period, the franchisee is expected to fully cooperate with Anago to ensure full and timely payments are made to each Unit Franchisee.