If an Anago subfranchisor transfers the agreement to a wholly-owned entity, is the individual subfranchisor released from their obligations?
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 transfers their agreement to a wholly-owned entity, the individual subfranchisor is NOT released from their obligations.
Specifically, Anago will not unreasonably withhold consent for an individual subfranchisor to transfer the agreement to a newly formed legal entity where the individual owns 100% of the ownership interests, provided that the entity only operates the Anago subfranchise business. However, this transfer does not release the individual subfranchisor from their obligations. The individual remains personally obligated under the agreement, jointly with the transferee, and acts as a guarantor of the transferee's obligations after the transfer.
To formalize this arrangement, the individual subfranchisor must sign and deliver a Personal Guaranty (Exhibit III) and both the transferor and transferee must sign and deliver an Assignment and Assumption Agreement (Exhibit IV) to Anago. This ensures that Anago has continued recourse to the original subfranchisor even after the business is operated through a separate legal entity.