Following the termination or default of the Subfranchise Agreement, what right does Anago Franchising International (AFI) have regarding the assignment of Client Accounts?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
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- Upon the termination or expiration of the Subfranchise Agreement, or upon Subfranchisor's default under the Subfranchise Agreement, AFI may, at its option, assume the Client Accounts. Upon exercise of this option, AFI shall be deemed to be substituted in the place and stead of Subfranchisor and shall be deemed to have assumed expressly all of the terms, covenants and obligations of the Client Accounts therefore applicable to Subfranchisor and shall likewise be entitled to enjoy all of the rights and privileges granted to Subfranchisor under the terms and conditions of the Client Accounts.
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- Upon the occurrence of the events set forth in paragraph 2 above, AFI shall have the right to assign ALL Client Accounts to an approved Anago subfranchisor, as designated by AFI.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, in the event of the termination or default of a Subfranchise Agreement, Anago Franchising International (AFI) has specific rights regarding the client accounts. AFI has the option to assume the client accounts, stepping into the shoes of the subfranchisor. This means AFI can take over all the responsibilities and benefits associated with those client accounts.
Specifically, upon termination or default, AFI can choose to take over the client accounts. If AFI exercises this option, it is considered to have replaced the subfranchisor in the client account agreements. AFI then assumes all the obligations the subfranchisor had under those client agreements and also gains all the rights and privileges the subfranchisor was entitled to.
Furthermore, AFI has the right to assign all client accounts to another approved Anago subfranchisee that AFI designates. This allows AFI to ensure that the client accounts continue to be serviced by an authorized Anago subfranchisee, maintaining the continuity of service and upholding the Anago brand standards. However, if AFI does not exercise its option to take assignment of the client accounts, it is not liable for any services, duties, or obligations related to those accounts, and the subfranchisor remains responsible.