In the event of termination, is Anago free to sell new unit franchises or subfranchise rights in the subfranchisor's area without any obligation to the former Anago subfranchisor?

According to Anago's 2025 Franchise Disclosure Document, if the subfranchise agreement is terminated, Anago has the right to sell new unit franchises or enter into new subfranchise agreements in the former subfranchisor's area without owing any obligations to the terminated subfranchisor. The former subfranchisor must immediately cease operations, stop identifying as an Anago subfranchise, and discontinue selling unit franchises for Anago. They also need to cease using Anago's advertising materials and take steps to disassociate from Anago.

This means that a subfranchisor who is terminated loses all rights to their territory and any potential future revenue from it. Anago can then directly benefit from the market the subfranchisor previously developed. The subfranchisor must also stop soliciting clients and communicating with them, as well as stop providing services to unit franchisees. All client accounts must be assigned to Anago.

This clause highlights a significant risk for Anago subfranchisors. Upon termination, they not only lose their business but also the value they built in their territory, which Anago can then capitalize on without compensation to the former subfranchisor. Prospective subfranchisors should carefully consider this provision and its potential financial implications before investing in an Anago subfranchise.