What happens if an Anago franchisee attempts to transfer their interest in the franchise in violation of the agreement?

According to Anago's 2025 Franchise Disclosure Document, if a franchisee attempts to transfer any rights or obligations under the franchise agreement without Anago's written consent, it constitutes an Event of Default. This includes transfers of any interest in the franchisee entity itself.

Specifically, Section 10.2(a) states that the rights and duties within the agreement are personal to the franchisee, and Anago has granted the franchise based on the franchisee's skills, reputation, aptitude, and financial capacity. Therefore, any transfer of interest in the agreement, accounts, or the unit franchise requires Anago's prior written consent, which Anago may grant or withhold at its sole discretion. There are limited exceptions, such as transfers of less than 5% interest in a publicly held corporation or transfers to original shareholders or partners. A transfer of 25% or more of the voting or ownership interests is considered a transfer of interest in the agreement.

Section 8 outlines the consequences of default, noting that Anago may terminate all rights granted to the franchisee under the agreement, effective immediately upon notice, without providing an opportunity to cure the default. This termination can occur if the franchisee attempts to transfer any rights or obligations under the agreement without Anago's written consent, as stated in Section 8(f). Therefore, a franchisee should seek written consent from Anago before attempting any transfer to avoid potential termination of the franchise agreement.