What is Anago Franchisor obliged to pay each Unit Franchisee from the Anago Escrow Account?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
During any period that Subfranchisor is in default of this Agreement, and for 90 days thereafter (the "Default Period"), Franchisor will have the right to deposit and hold in the Anago Escrow Account certain Client receipts (the "Escrow Receipts"), less any funds owed to Franchisor or its affiliates for royalties, 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 Franchisor and distributed directly to the Unit Franchisee the Escrow Receipt owed, less amounts due, as delineated in the Unit Franchise Agreement.
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 Franchisor.
Franchisor will be obliged to pay each Unit Franchisee only for receipts that Franchisor deposits 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 Franchisor determines that Subfranchisor has collected a Client receipt and subsequently failed to pay the corresponding Unit Franchisee timely pursuant to the terms of the Unit Franchise Agreement directly, the Franchisor may deduct and offset the same amount from Subfranchisor's escrow account.
Franchisor may independently consult with each Unit Franchisee and Client to determine the amount of funds the Unit Franchisee is owed.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, during a Subfranchisee's default period, Anago has the right to deposit client receipts into the Anago Escrow Account. From this account, Anago is obliged to pay each Unit Franchisee the amount of the Escrow Receipt owed to them, less any amounts due as outlined in the Unit Franchise Agreement. Anago will only pay Unit Franchisees for receipts that Anago deposits 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.
This process is initiated when a Subfranchisee (the Area Developer) defaults on their agreement. During this default period, Anago takes control of the billing and collection process, ensuring that Unit Franchisees continue to receive payments for their services. This arrangement protects the Unit Franchisees' income stream, as Anago steps in to manage the financial transactions directly.
Anago may also independently consult with each Unit Franchisee and Client to determine the amount of funds the Unit Franchisee is owed. Additionally, if Anago determines that the Subfranchisee collected a Client receipt but failed to pay the Unit Franchisee, Anago can deduct that amount from the Subfranchisee's escrow account. This ensures that Unit Franchisees are paid correctly and promptly, even if the Subfranchisee is not fulfilling their obligations.