Is insolvency a curable default under the Anago Subfranchise Rights Agreement?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
n notice from us of the default. | | 5. Appointment of a receiver or custodian; | | |---|---| | 6. Filing for composition with creditors; | | | 7. Judgment of $5,000 | or more remains | | 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; | |----------------------------------------------------|----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 44–52)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, insolvency is not a curable default under the Subfranchise Rights Agreement. The FDD specifies certain defaults that cannot be cured, and insolvency is listed among them. This means that if an Anago subfranchisee becomes insolvent or makes a general assignment for the benefit of creditors, Anago has grounds to terminate the Subfranchise Rights Agreement without providing an opportunity to correct the situation.
Other non-curable defaults include filing for bankruptcy that is not dismissed within 45 days, adjudication of bankruptcy, filing for appointment of a receiver or custodian, the appointment of a receiver or custodian, filing for composition with creditors, a judgment of $5,000 or more remaining unsatisfied for 30 days or longer, execution of levy, and filing of a foreclosure suit that is not dismissed within 45 days.
This policy is relatively standard in franchising, as financial stability is crucial for maintaining the integrity and reputation of the Anago brand. Franchise agreements often contain clauses that allow for termination in cases of insolvency to protect the franchisor and other franchisees from potential financial or operational disruptions. Prospective Anago franchisees should carefully consider the implications of these non-curable defaults and ensure they have a solid financial plan in place to mitigate the risk of such occurrences.