For Anago, can the Anago Escrow Account be commingled with any other funds of the Franchisor?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
be utilized solely for Subfranchisor's Client payments and distribution of payments to Subfranchisor, and will not be commingled with any other funds of Franchisor, or of any other of Franchisor's subfranchisors' client payments. Subfranchisor will set up a separate operating account in its corporate name d/b/a "Anago of [Insert Area]". All Client checks and payments shall be made payable in the name of the Anago Escrow Account, and Subfranchisor must deposit all client checks and payments received into such account on a daily basis.
- (c) Distribution of Client Receipts. After Subfranchisor receives a Client payment and deposits that payment into the designated Anago Escrow Account, Franchisor will: (i) distribute to Subfranchisor once per week, on Wednesday, the Client Receipts deposited into the Anago Escrow Account during the prior week (with a week running from Sunday through Saturday) which have cleared, less any funds owed to Franchisor or its 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; and (ii) Franchisor will hold back in the Anago Escrow Account a portion of the funds sufficient to cover amounts Subfranchisor owes to it under this Agreement, as described in subsection (i). Subfranchisor will be responsible for the payment of sales tax, as applicable, which payments will be made from Subfranchisor's operating account. Subfranchisor is solely responsible for payment to its Unit Franchisees for services rendered to Clients, which payments should be made on the 20th day of each month following the month in which services were rendered, or as otherwise prescribed in its Unit Franchise Agreement, as authorized by Franchisor, and Subfranchisor will provide its Unit Franchisees with a statement detailing the previous month's accounting activity. Subfranchisor will send to Franchisor daily, by facsimile or electronic mail, items for all invoicing activity to each Client serviced and all supplies and equipment sold by Subfranchisor's Unit Franchisees for that day (for at least the first 12 months). Subfranchisor will provide to Franchisor, by the 25th day of each month, a copy of all statements issued to its Unit Franchisees during the month in the form and manner designated by Franchisor. Franchisor at its option, will require Subfranchisor to accomplish this via hard copies sent by mail, courier, or by electronic data transmission via a modem or Internet access installed within Subfranchisor's computer.
- (d) Unintentional Payments. If any client payments are sent directly from the client to Subfranchisor's or a Unit Franchisee's operating Account, Subfranchisor will immediately notify
Franchisor of the payment receipt with the corresponding deposit slip.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
Based on the 2025 FDD, Anago subfranchisees are required to deposit all client payments into a designated Anago Escrow Account. After the subfranchisor deposits client payments into this account, Anago will distribute these receipts to the subfranchisor weekly, less any funds owed to Anago for royalties, administrative support, insurance, accounting, service, advertising, late, temporary management, or interest fees. Anago will also hold back a portion of the funds to cover amounts the subfranchisor owes under the agreement.
Furthermore, during any period that the subfranchisor is in default of the agreement, Anago has the right to deposit and hold certain client receipts in the Anago Escrow Account, less any funds owed to Anago for royalties, accounting, service, advertising, late, temporary management, or interest fees. These escrow receipts may be held by Anago and distributed directly to the unit franchisee the escrow receipt owed, less amounts due, as delineated in the Unit Franchise Agreement. The subfranchisor's residual amounts may remain in the Anago Escrow Account for the duration of the default period and may be offset by amounts owed to Anago.
The FDD states that if a Fund is established, it will not be Anago's asset and is not a trust. However, the document does not explicitly state whether Anago can commingle the funds in the Anago Escrow Account with any other funds of the franchisor. A prospective franchisee should seek clarification from Anago regarding whether the funds in the Anago Escrow Account are kept separate from Anago's other operating funds.