What is the duration of the non-compete period for an Anago franchise after termination or expiration of the agreement?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
- The following paragraphs are added to the end of Item 17:
CALIFORNIA BUSINESS AND PROFESSIONS CODE SECTIONS 20000 THROUGH 20043 PROVIDE RIGHTS TO THE FRANCHISEE CONCERNING TERMINATION, TRANSFER OR NON-RENEWAL OF A FRANCHISE. IF THE FRANCHISE AGREEMENT CONTAINS A PROVISION THAT IS INCONSISTENT WITH THE LAW THE LAW WILL CONTROL. THE SUBFRANCHISE RIGHTS AGREEMENT CONTAINS A COVENANT NOT TO COMPETE THAT EXTENDS BEYOND TERMINATION OF THE FRANCHISE. THIS PROVISION MAY NOT BE ENFORCEABLE UNDER
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to the 2025 Anago Franchise Disclosure Document, the length of the post-term non-compete period may not be enforceable in California. Specifically, the FDD states that the Subfranchise Rights Agreement contains a covenant not to compete that extends beyond termination of the franchise. However, this provision may not be enforceable under California law. This suggests that while Anago's standard agreement includes a post-term non-compete, its enforceability is questionable in California.
For a prospective Anago franchisee in California, this means the enforceability of the non-compete agreement is uncertain. Franchisees should seek legal counsel to understand their rights and obligations fully. If the non-compete is unenforceable, a former franchisee might be able to compete with Anago immediately after the franchise agreement ends.
It is important to note that the FDD only addresses the enforceability of the non-compete in California. For franchisees in other states, the standard non-compete terms in the Anago agreement would likely apply, and franchisees should carefully review those terms and seek legal advice on their enforceability in their specific jurisdiction.