How many justified complaints from Unit Franchisees within a specific timeframe can lead to Anago terminating the Subfranchise Agreement?

According to Anago's 2025 Franchise Disclosure Document, Anago can terminate the Subfranchise Agreement if they receive more than three justified complaints from Unit Franchisees within a 12-month period, or more than two justified complaints within a 6-month period. These complaints must, in Anago's reasonable discretion, be considered justified and adversely affect the Anago system. This clause is designed to protect the brand's reputation and maintain standards across all franchise locations.

For a prospective Anago subfranchisor, this means that managing relationships with Unit Franchisees and addressing their concerns promptly is crucial. Failure to do so, resulting in multiple justified complaints, can lead to the termination of the Subfranchise Agreement. The determination of whether a complaint is "justified" is at Anago's discretion, so maintaining open communication and striving for fair resolutions is essential.

This type of clause is relatively common in franchise agreements, as franchisors need mechanisms to ensure quality control and protect their brand. However, the specific thresholds (three complaints in 12 months or two complaints in 6 months) and the subjectivity of "justified" complaints highlight the importance of a subfranchisor's proactive management and conflict-resolution skills. A prospective subfranchisor should clarify with Anago what processes are in place for handling and resolving franchisee complaints to fully understand their obligations and potential risks.