What happens if Anago defaults in payment of indebtedness?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
If Subfranchisor commits a default in the performance of any of the covenants, conditions or agreements contained in any other agreement between Subfranchisor and Franchisor or its Affiliates, Subfranchisor shall also have breached this Agreement and Franchisor shall have all of the remedies available to it under this Agreement, including, but not limited to, the right to terminate this Agreement pursuant to Section 8.2, in addition to Franchisor's rights, if any, under such other agreement(s).
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.
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- GUARANTOR'S Covenants, Representations and Guaranty. In consideration of and as an inducement to the execution of the Franchise Agreement by FRANCHISOR, you hereby personally, irrevocably and unconditionally:
- b. guarantee the prompt payment and performance of all Obligations (as hereinafter defined) of SUBFRANCHISOR under the Anago Agreements;
- c. agree to be personally bound by, and personally liable for the breach of, each and every provision in the Franchise Agreement and each and every provision in any of the Anago Agreements, as if you were the SUBFRANCHISOR;
You hereby waive:
b. notice of demand for payment of any indebtedness or nonperformance by SUBFRANCHISOR of any indebtedness or nonperformance by SUBFRANCHISOR of any of the Obligations;
d. any right you may have to require that an action be brought against SUBFRANCHISOR or any other person as a condition of liability;
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, if a Subfranchisor defaults in the performance of any agreement between the Subfranchisor and Franchisor (Anago) or its affiliates, the Subfranchisor will have breached the agreement. Anago will have all available remedies, including the right to terminate the agreement.
Additionally, during any period that the Subfranchisor is in default, and for 90 days thereafter, Anago has the right to deposit and hold Client receipts in the Anago Escrow Account. From these Escrow Receipts, Anago can deduct funds owed for royalties, accounting fees, service fees, advertising fees, late fees, temporary management fees, interest, and any other payments due to Anago or its affiliates. The remaining amounts may stay in the escrow account and be offset by amounts owed to Anago.
Furthermore, the guarantor of the Franchise Agreement is responsible for guaranteeing the prompt payment and performance of all obligations of the Subfranchisor under the Anago Agreements. The guarantor also agrees to be personally bound by the provisions of the Franchise Agreement and any Anago Agreements, as if they were the Subfranchisor. The guarantor waives certain rights, including notices of demand for payment, and any right to require that an action be brought against the Subfranchisor as a condition of liability.