What is the intended scope of the written agreement between Anago and the Subfranchisor?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
The provisions of this ARTICLE 13 shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement, however effected.
ARTICLE 14 - TERM
Section 14.1 - Term
The Term of this Agreement runs for 10 years from the Agreement Date, unless sooner terminated as provided in this Agreement. The conditions under which Subfranchisor will have the opportunity of obtaining a Successor Anago Subfranchise Rights Agreement at the expiration of this Agreement are stated in Section 14.2.
Section 14.2 - Option to Obtain Successor Anago Subfranchise Rights Agreement
So long as Subfranchisor is not in material default under this Agreement and each Unit Franchise Agreement and all Unit Franchisees are in reasonable compliance with the terms and conditions of their respective Unit Franchise Agreements, Subfranchisor is hereby granted an option to obtain a Successor Anago Subfranchise Rights Agreement for an additional 10-year term, without an additional franchise fee, however both parties agree that any additional costs due to changes in state, federal or local laws associated with the execution of a Successor Anago Subfranchise Rights Agreement shall be borne by Subfranchisor. The following conditions must be met at the time the option is exercised and immediately before the beginning of the Succeeding Term, unless another time is specified, in order to obtain a Successor Anago Subfranchise Rights Agreement:
(i) Subfranchisor gives Franchisor written notice of Subfranchisor's intention to exercise its option to obtain a Successor Anago Subfranchise Rights Agreement by
submitting an application for a Successor Anago Subfranchise Rights Agreement between 9 months and 12 months before the end of the Term;
- (ii) Subfranchisor is not in default of any term of this Agreement, or any other agreement between Subfranchisor and Franchisor or its Affiliates and any outstanding debt owed to Franchisor by Subfranchisor has been satisfied;
- (a) Should the Subfranchisor be in a state of default prior to expiration of the term of this agreement or enter into a state of default during the last 9 months remaining, the default must be cured prior to the renewal or obtaining a Successor Anago Subfranchise Rights Agreement; and
- (b) Should the default not be cured or be determined to be incurable within 60 days of the expiration of the agreement all remedies to cure if any shall be at the sole discretion of the Franchisor before a Successor Anago Subfranchise Rights Agreement may be obtained;
- (iii) Subfranchisor, within 30 days before the expiration of the Term, signs and delivers to Franchisor, Franchisor's then current form of Anago Subfranchise Rights Agreement, which may contain terms and conditions materially different from this Agreement; provided, however, no renewal fee will be charged.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, the written agreement between Anago and the Subfranchisor covers several key aspects of the franchise relationship. The Subfranchise Rights Agreement lasts for a term of 10 years, but may be terminated sooner under certain conditions specified in the agreement. If the Subfranchisor is not in material default and their Unit Franchisees are in reasonable compliance, the Subfranchisor has the option to obtain a Successor Anago Subfranchise Rights Agreement for an additional 10-year term, without paying an additional franchise fee. However, the Subfranchisor is responsible for any additional costs due to changes in state, federal, or local laws associated with the execution of the successor agreement.
The agreement also addresses the handling of clients and client accounts. With the exception of National Accounts, the Subfranchisor enters into client contracts using a form approved by Anago. Anago retains ownership of all rights to clients and client accounts upon default, termination, or expiration of the agreement. The Subfranchisor is responsible for assigning Unit Franchisees to service client accounts and must ensure that all accounts are serviced in accordance with the Unit Franchise Agreement and Anago Manuals. All client payments are collected and accounted for according to Anago's procedures, which may be modified with written notice to the Subfranchisor. The Subfranchisor must notify Anago of any client complaints and provide copies of written complaints.
Furthermore, the agreement covers the use and protection of Anago's confidential information, including the Anago Manuals. These manuals and other confidential information remain the sole property of Anago, and the Subfranchisor only has the right to use them during the term of the agreement, subject to the restrictions outlined. The Subfranchisor is prohibited from altering or editing the manuals. Any improvements or modifications to the confidential information made by the Subfranchisor or their employees are owned solely by Anago. The Subfranchisor is obligated to have written agreements with their employees and Unit Franchisees assigning all rights to any such innovations to the Subfranchisor, who then assigns them to Anago. The Subfranchisor must also assist Anago in securing and enforcing these ownership rights, even after the agreement expires or terminates.
Finally, the agreement addresses National Accounts, defining them as clients with multiple locations or those who request a proposal that the Subfranchisor is not qualified to submit. The Subfranchisor must refer all National Accounts to Anago and cannot enter into contracts with them without Anago's written consent. Anago reserves the right to contract directly with National Accounts. If Anago signs a contract with a National Account in the Subfranchisor's area, Anago may offer the Subfranchisor the option to have Unit Franchisees perform services for those locations on a non-exclusive basis, under terms and conditions specified by Anago.