Is Anago obligated to pay compensation to the Subfranchisor when obtaining assignment of Client Accounts?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
nchisor may provide Subfranchisor the option, on terms and conditions specified by Franchisor and on a non-exclusive basis, to license Unit Franchisees in the Area to perform services for National Account locations within the Area.
- (b) With the exception of National Accounts, Subfranchisor shall enter into Client contracts in the form approved by Franchisor (a "Client Account") agreeing to provide Anago janitorial and other approved facilities-related services to such Client through Unit Franchisees in
the Area. Subfranchisor acknowledges and agrees that Franchisor shall own all rights in and to all Clients and Client Accounts upon default, termination or expiration of this Agreement.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, the Subfranchisor acknowledges and agrees that Anago owns all rights to Clients and Client Accounts upon the termination or expiration of the Subfranchise Agreement. The document does not explicitly state that Anago is obligated to pay compensation to the Subfranchisor when Anago obtains assignment of Client Accounts. Instead, the agreement stipulates that upon termination or expiration of the Subfranchise Agreement, the Subfranchisor must deliver all Client lists and Client Accounts to Anago, relinquishing any further rights to them. This transfer of Client Accounts is a condition of the Subfranchise Agreement.
Furthermore, the Collateral Assignment of Client Accounts outlines that the Subfranchisor assigns its rights to Anago as security for the Subfranchisor's obligations under the Subfranchise Agreement. Upon termination or default, Anago has the option to assume the Client Accounts and step into the Subfranchisor's role regarding those accounts. This assignment ensures that Anago can maintain the client relationships and continue providing services through other subfranchisors if necessary.
Given these conditions, a prospective Anago subfranchisee should be aware that they will not receive compensation for the transfer of Client Accounts to Anago upon termination or expiration of the agreement. This is a crucial aspect to consider, as the value of the subfranchise is tied to the client base developed during the term of the agreement. It is advisable for potential subfranchisees to seek legal counsel to fully understand the implications of this clause and to negotiate terms that protect their interests, such as a potential revenue-sharing agreement for a limited period after the transfer.