What happens to Anago franchise contracts after the initial 10-year term?

The provisions of this ARTICLE 13 shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement, however effected.

ARTICLE 14 - TERM

Section 14.1 - Term

The Term of this Agreement runs for 10 years from the Agreement Date, unless sooner terminated as provided in this Agreement. The conditions under which Subfranchisor will have the opportunity of obtaining a Successor Anago Subfranchise Rights Agreement at the expiration of this Agreement are stated in Section 14.2.

Section 14.2 - Option to Obtain Successor Anago Subfranchise Rights Agreement

So long as Subfranchisor is not in material default under this Agreement and each Unit Franchise Agreement and all Unit Franchisees are in reasonable compliance with the terms and conditions of their respective Unit Franchise Agreements, Subfranchisor is hereby granted an option to obtain a Successor Anago Subfranchise Rights Agreement for an additional 10-year term, without an additional franchise fee, however both parties agree that any additional costs due to changes in state, federal or local laws associated with the execution of a Successor Anago Subfranchise Rights Agreement shall be borne by Subfranchisor. The following conditions must be met at the time the option is exercised and immediately before the beginning of the Succeeding Term, unless another time is specified, in order to obtain a Successor Anago Subfranchise Rights Agreement:

(i) Subfranchisor gives Franchisor written notice of Subfranchisor's intention to exercise its option to obtain a Successor Anago Subfranchise Rights Agreement by

submitting an application for a Successor Anago Subfranchise Rights Agreement between 9 months and 12 months before the end of the Term;

• (ii) Subfranchisor is not in default of any term of this Agreement, or any other agreement between Subfranchisor and Franchisor or its Affiliates and any outstanding debt owed to Franchisor by Subfranchisor has been satisfied;
  • (a) Should the Subfranchisor be in a state of default prior to expiration of the term of this agreement or enter into a state of default during the last 9 months remaining, the default must be cured prior to the renewal or obtaining a Successor Anago Subfranchise Rights Agreement; and
  • (b) Should the default not be cured or be determined to be incurable within 60 days of the expiration of the agreement all remedies to cure if any shall be at the sole discretion of the Franchisor before a Successor Anago Subfranchise Rights Agreement may be obtained;
• (iii) Subfranchisor, within 30 days before the expiration of the Term, signs and delivers to Franchisor, Franchisor's then current form of Anago Subfranchise Rights Agreement, which may contain terms and conditions materially different from this Agreement; provided, however, no renewal fee will be charged. Upon signing and delivery by Franchisor and the expiration of the Initial Term, the Successor Anago Subfranchise Rights Agreement supersedes in all respects this Agreement, and the terms of which may differ from the terms of this Agreement;
• (iv) Subfranchisor has complied with Franchisor's then current qualification and training requirements and all other requirements we impose under a Successor Anago Subfranchise Rights Agreement;
• (v) Subfranchisor understands that any Successor Agreement shall contain a provision for the minimum monthly royalty paid to Franchisor to not be less than the greater of either the minimum required in the last year of this agreement or the average monthly royalty paid during the last year of this agreement; and
• (vi) Subfranchisor must have executed and delivered to Franchisor a general release (in a form prescribed by Franchisor) of all claims against Franchisor and its Affiliates and each of their respective officers, directors, shareholders, partners, agents, representatives, independent contractors, servants, and employees, in their corporate and individual capacities, including claims arising under this Agreement and under any applicable laws, rules or regulations.

Source: Item 23 — RECEIPTS (FDD pages 62–298)