What happens to the Anago Client Accounts upon termination or expiration of the Subfranchise Agreement or upon the Subfranchisor's default?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
the Area. Subfranchisor acknowledges and agrees that Franchisor shall own all rights in and to all Clients and Client Accounts upon default, termination or expiration of this Agreement.
(f) Upon termination or expiration (through default or otherwise) of this Agreement, Subfranchisor shall deliver all Client lists and Client Accounts to Franchisor, including any and all documentation relating thereto and Subfranchisor shall have no further rights therein.
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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.
(c) Subfranchisor shall immediately discontinue all use of all Confidential Information, including all Manuals and Client Information.
(a) Subfranchisor will take all action as may be necessary to cancel any fictitious, trade or assumed name registration, or equivalent registration that contains the name "Anago" or any other Proprietary Mark or colorable imitation of any trademark, trade name or service mark of Franchisor or its Affiliates.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, upon default, termination, or expiration of the Subfranchise Agreement, Anago owns all rights to the Clients and Client Accounts. Upon termination or expiration of the agreement, the subfranchisor must deliver all client lists and client accounts to Anago, including all related documentation, and will have no further rights to them.
Anago may opt to assume the Client Accounts upon the termination or expiration of the Subfranchise Agreement, or upon the Subfranchisor's default. If Anago exercises this option, it will be substituted in place of the subfranchisor and assume all obligations and rights related to the Client Accounts. However, if Anago does not exercise its option to take assignment of the client accounts, it will not be liable for the performance of any services, duties, or obligations related to those accounts, and the subfranchisor will remain liable.
Furthermore, Anago has the right to assign ALL Client Accounts to an approved Anago subfranchisor, as designated by Anago. The subfranchisor also agrees to immediately discontinue all use of all Confidential Information, including all Manuals and Client Information. This includes ceasing solicitations of Clients and all communication with all Clients. The subfranchisor must also take all action to cancel any trade name registration that contains the name "Anago".
This means that a subfranchisee could lose the entire book of business they have built if they default, or when the agreement expires. This could have significant financial implications for the subfranchisee. It is important to note that Anago has the sole discretion on whether to exercise its options regarding the client accounts.