Does Anago require approval for all transfers of a Subfranchise Rights Agreement, and if not, what are the exceptions?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
| k. "Transfer" by franchisee - defined | Section 7.2 | Transfer means any sale, assignment, transfer, conveyance or gift, whether voluntarily or involuntarily, directly or indirectly, by operation of law or otherwise, of any direct or indirect interest in your Subfranchise Rights Agreement or in your Anago Subfranchise Rights Business. A transfer to any other original owner of your Anago Subfranchise Rights Business is not considered a transfer; provided that the transferee shall remain bound by the personal guaranty. |
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| l. Franchisor approval of transfer by franchisee | Section 7.2 | We have the right to approve or disapprove of any transfers, except that consent is not required for the following transfers; (i) transfer by an individual to an entity wholly owned by such individual, which entity shall conduct no business other than the Subfranchise Business; (ii) a transfer of less than a 5% interest in a publicly-held corporation; (iii) if a Subfranchisor is an entity, a transfer of any interest in the Subfranchisor from an existing owner to another existing owner; (iv) transfers of less than a controlling interest, in the aggregate, in you; and (v) transfers which are made for family and estate planning purposes (1) to your spouse, (2) to your adult child(ren) or (3) into a trust agreement for the benefit of you, your spouse, or your children. |
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, Anago maintains the right to approve or disapprove any transfers of a Subfranchise Rights Agreement. However, there are specific exceptions where Anago's consent is not required.
These exceptions include: (i) a transfer by an individual to an entity wholly owned by that individual, provided the entity only conducts the Subfranchise Business; (ii) a transfer of less than a 5% interest in a publicly-held corporation; (iii) if the Subfranchisor is an entity, a transfer of any interest from an existing owner to another existing owner; (iv) transfers of less than a controlling interest, in the aggregate; and (v) transfers made for family and estate planning purposes to a spouse, adult child(ren), or into a trust agreement for the benefit of the franchisee, their spouse, or their children.
These exceptions provide Anago franchisees with some flexibility in transferring their business under specific circumstances without needing direct approval from Anago. However, any other form of transfer requires Anago's approval, ensuring they maintain control over who operates under their brand and that the standards of operation are upheld by the new subfranchisee.