If an Anago Subfranchisor violates the post-term covenants, on what date does the extended 24-month non-competition period commence?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
- (f) If Subfranchisor violates the post-term covenants set forth in Section 10.2(b) above following expiration or termination of this Agreement, Subfranchisor acknowledges and agrees that the post-term non-competition covenant period of 24 months shall be extended to commence on the date Subfranchisor first complies with such covenant so as to provide Franchisor with the full benefit of the post-term covenant period uninterrupted by Subfranchisor's interference.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, if a Subfranchisor violates the post-term covenants outlined in Section 10.2(b) after the agreement expires or terminates, the 24-month non-competition period is extended. This extension begins on the date the Subfranchisor first complies with the covenant.
This means that if a Subfranchisor breaches the non-compete agreement, the 24-month clock doesn't start ticking until they cease the violating activity. This provision aims to ensure that Anago receives the full benefit of the non-compete agreement without any reduction due to the Subfranchisor's interference.
For a prospective Anago franchisee, this clause is a significant restriction. It means that any violation of the non-compete terms will effectively prolong the period during which they are prohibited from engaging in competitive activities. Subfranchisors should carefully consider the scope and implications of these post-term covenants to avoid unintentionally extending their non-competition obligations.