What is the impact of unfavorable conduct on the Anago Subfranchise Rights Business?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
| h. "Cause" defined – non-curable defaults | Sections 8.1 and 8.2 | The following defaults may not be cured: 1. Insolvency or general assignment for creditors; 2. Filing in bankruptcy that is not dismissed within 45 days; 3. Adjudication of bankruptcy; 4. Filing for appointment of a receiver or custodian; 5. Appointment of a receiver or custodian; 6. Filing for composition with creditors; 7. Judgment of $5,000 or more remains unsatisfied for 30 days or longer; 8. Execution of levy; 9. Filing of foreclosure suit that is not dismissed within 45 days; 10. Sale of a substantial portion of your assets after levy; 11. Failure to complete training; 12. Knowing or willful violations of laws, rules or regulations, the commission of an illegal act in connection with the sale of a franchise, act of dishonesty, etc.; 13. You or any of your officers, directors, or owners or employees is charged with, pleads guilty or no contest to, or is convicted of a felony, crime or moral turpitude or any other offense that might have a materially adverse affect on the System or the Proprietary Marks; 14. You deny us our right of inspection or audit; 15. Material breach of any obligation to your Unit Franchisees in the Area; 16. You commit any acts involving dishonesty, bad faith, misfeasance, malfeasance, or willful misconduct; 18. Unauthorized assignment or transfer; 19. Breach of confidentiality or non competition provisions of your Subfranchise Rights Agreement; 20. You knowingly maintain false books or records; 21. Repeated complaints from Unit Franchisees in your Area; 22. Failure to achieve Minimum Annual Performance Requirements; 23. Failure to comply with in-term restrictive covenants; |
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| i. Franchisee's obligations on termination / non renewal | ARTICLE 9, Subsection 10.2(b) and Section 11.2 | You must: 1. Comply with the restrictions on competition (see row "r" below); 2. Indemnify us from any losses or damages we sustain as a result of your operation of the Anago Subfranchise Rights Business; 3. Discontinue all use of, and maintain confidentiality of, all our Confidential Information; 4. Cease operating your Anago Subfranchise business; 5. Pay all amounts you owe to us within 10 days; 6. Discontinue use of Proprietary Marks and de-identify your Subfranchise Rights Business; 7. Cease use of the Subfranchise Rights Business' telephone numbers, websites, social media accounts, etc. and transfer such telephone numbers, websites, and social media accounts to us or such other party as we may designate; 8. Assign all Unit Franchises and Unit Franchise Agreements to us; 9. Assign all Clients and Client Accounts to us; 10. Return all Proprietary Property to us; 11. Cease selling Unit Franchises; cease providing services to Unit Franchises; and cease solicitation of Clients; and 12. Cancel assumed, fictitious and trade name registrations. |
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD page 43)
What This Means (2025 FDD)
Based on Anago's 2025 Franchise Disclosure Document, if a franchisee's Subfranchise Rights Agreement is terminated or not renewed, the franchisee has several obligations. These include complying with restrictions on competition, indemnifying Anago from any losses or damages sustained due to the franchisee's operation of the Anago Subfranchise Rights Business, and discontinuing all use and maintaining the confidentiality of Anago's confidential information. The franchisee must also cease operating their Anago Subfranchise business. These stipulations ensure that upon termination or non-renewal, the franchisee does not unfairly compete with Anago or disclose proprietary information.
Additionally, the franchisee is required to settle all outstanding payments within 10 days, discontinue the use of Anago's Proprietary Marks, and de-identify their Subfranchise Rights Business. They must also cease using the Subfranchise Rights Business' telephone numbers, websites, and social media accounts, transferring these assets to Anago or another designated party. Furthermore, the franchisee must assign all Unit Franchises and Unit Franchise Agreements, as well as all Clients and Client Accounts, to Anago. These measures protect Anago's brand identity, customer relationships, and franchise network.
Finally, the franchisee must return all Proprietary Property to Anago, cease selling Unit Franchises, stop providing services to Unit Franchises, and discontinue soliciting Clients. They are also required to cancel any assumed, fictitious, and trade name registrations associated with the business. These comprehensive obligations ensure a clean break between the franchisee and Anago, safeguarding Anago's interests and preventing any potential misuse of its assets or business relationships after the termination or non-renewal of the Subfranchise Rights Agreement.