If an individual Anago Subfranchisor transfers the Agreement to a wholly-owned entity, is the individual released from their obligations under the Agreement?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) Transfer to a Wholly Owned Entity.
If Subfranchisor is an individual, Franchisor will not unreasonably withhold its consent to a transfer of this Agreement by such individual to a newly formed legal entity in which it owns 100% of the ownership interests and which will conduct no business other than operating the Subfranchise Business under this Agreement.
No such transfer will act to release the individual Subfranchisor of any of its obligations under this Agreement, and the individual Subfranchisor will continue to be personally obligated under this Agreement posttransfer, both jointly with the transferee and as the guarantor of the transferee's obligations posttransfer.
As part of the consideration for Franchisor's consent to a transfer under this paragraph, the individual Subfranchisor will sign and deliver to Franchisor a Personal Guaranty in the form attached hereto as Exhibit III, and the transferor and transferee will sign and deliver an Assignment and Assumption Agreement in the form attached hereto as Exhibit IV.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, if a Subfranchisor is an individual and transfers the Anago Subfranchise Rights Agreement to a wholly-owned legal entity, the individual Subfranchisor is NOT released from their obligations under the agreement. The individual will continue to be personally obligated under the Agreement post-transfer. They will be jointly liable with the transferee and act as the guarantor of the transferee's obligations after the transfer.
To formalize this transfer, the individual Subfranchisor must sign and deliver a Personal Guaranty (Exhibit III) to Anago. Additionally, both the transferor and transferee are required to sign and deliver an Assignment and Assumption Agreement (Exhibit IV).
This requirement ensures that Anago maintains a level of security and commitment to the agreement, even if the Subfranchise business is operated through a legal entity. The personal guaranty from the original Subfranchisor provides Anago with recourse directly to the individual's assets and financial capacity, in addition to the newly formed entity.