How can Anago require a subfranchisor to pay fees?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 23: RECEIPTS]
ARTICLE 4 - SUBFRANCHISE FEE AND COMPENSATION
Section 4.1 - Subfranchise Fee
Subfranchisor will pay to Franchisor a Subfranchise Fee in the amount of $98,000. The Subfranchise Fee is fully earned by Franchisor and is non-refundable upon signing this Agreement in consideration for the administrative and other costs incurred by Franchisor and opportunities lost or deferred as a result of the rights granted to Subfranchisor in this Agreement, except if Subfranchisor is not accepted by Franchisor at its home office within 30 days from the Agreement Date or except as provided in Subsection 2.1(b).
Section 4.2 - Ongoing Payments to Franchisor
- (a) Royalty Fee.
During the Term, Subfranchisor will pay to Franchisor a monthly royalty fee ("Royalty Fee") by the 20th day of each month equal to 5% of the previous calendar month's Gross Revenues.
Subfranchisor acknowledges and agrees that its payment of Royalty Fees to Franchisor is subject to a monthly minimum equal to the greater of: (i) 5% of the previous month's Gross Revenues generated by Subfranchisor and the Unit Franchisees under the Unit Franchise Agreements; or (ii) $1,500 per month starting in the 13th month of operation, and each year thereafter the minimum monthly royalty shall increase at the rate of an additional $1,500 each year.
- (b) Administrative Support Fee.
During the Term, Subfranchisor will pay to Franchisor a monthly fee of 2% of the previous calendar month's Gross Revenues collected.
- (c) Unit Franchisee Fee.
During the Term, Subfranchisor will pay to Franchisor a flat fee sum of $400.00 for each Anago Unit Franchise sold by or on behalf of the Subfranchisor.
- (d) Fund Contributions.
During the Term, Subfranchisor will pay to Franchisor a flat fee sum of $400.00 for each Anago Unit Franchise sold by or on behalf of the Subfranchisor.
- (d) Fund Contributions.
If a Fund is established pursuant to Section 2.5(b) of this Agreement, Subfranchisor shall contribute, on a monthly basis, an amount not to exceed 2.2% of Subfranchisor's monthly Gross Revenues during the preceding month, as designated by Franchisor.
- (e) Website Maintenance Fee.
If Franchisor, in its sole discretion and upon written notice to Subfranchisor, assumes the responsibility for maintaining Subfranchisor's webpage for the business that Subfranchisor conducts pursuant to this Agreement, then Subfranchisor will pay to Franchisor a monthly fee (currently $1,500) for ongoing maintenance and services in connection with Subfranchisor's webpage on Franchisor's website, which may include reimbursement of fees paid to outside vendors for services such as search engine optimization, design and maintenance, and chat.
Subfranchisor must pay the Website Maintenance Fee by the 10th of each month, in the manner designated by Franchisor.
Franchisor periodically may modify the amount of the Website Maintenance Fee.
- (f) Technology Fee.
Franchisor reserves the right, upon written notice to Subfranchisor, to initiate a monthly technology licensing fee ("Technology Fee") equal to up to 1.5% of
Subfranchisor's monthly Gross Revenues during the preceding month. Subfranchisor agrees to pay the Technology Fee, once initiated, for the remainder of the Term. The Technology Fee is consideration for computer system hardware and/or the development, license, and/or use of proprietary or third-party software, whether for Franchisor's or Subfranchisor's use in connection with services provided by Franchisor to Subfranchisor.
- (g) Monthly Reconciliation.
By or about the 25 th of each month, Franchisor will calculate the Subfranchisor's monthly Gross Revenues based on the Client payments deposited into the Anago Escrow Account during the previous calendar month.
By or about the 26 th of each month, Franchisor will distribute to Subfranchisor any amounts not previously distributed to Subfranchisor as part of the weekly distributions based on Gross Revenues received during the previous month, less any Royalty Fees, Fund contributions and any other payments owed to Franchisor which accrued during the previous calendar month, and less a holdback amount to satisfy the minimum account balance required to maintain the Anago Escrow Account.
- (h) All payments required under Section 4.2 shall be paid to Franchisor in the manner and in accordance with the procedures designated by Franchisor, which are subject to change upon written notice to Subfranchisor.
Without limiting the generality of the foregoing, Franchisor has the right to require Subfranchisor, upon written notice, to pay all fees required to be paid to Franchisor under this Agreement directly to Franchisor via electronic funds transfer ("EFT").
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, Anago can require subfranchisors to pay several fees throughout the term of the agreement. These fees include a royalty fee, administrative support fee, unit franchisee fee, fund contributions, website maintenance fee, and a technology fee. Anago calculates the subfranchisor's monthly gross revenues based on client payments deposited into the Anago Escrow Account during the previous calendar month.
The royalty fee is paid monthly and is equal to 5% of the previous calendar month's gross revenues. There is a minimum monthly royalty payment, which starts at $1,500 per month beginning in the 13th month of operation and increases by $1,500 each year thereafter. The administrative support fee is 2% of the previous calendar month's gross revenues, also paid monthly. For each Anago Unit Franchise sold by or on behalf of the subfranchisor, Anago charges a flat fee of $400.00.
Fund contributions, if a fund is established, cannot exceed 2.2% of the subfranchisor's monthly gross revenues. If Anago assumes responsibility for maintaining the subfranchisor's webpage, a monthly website maintenance fee (currently $1,500) is charged. Anago can also initiate a monthly technology licensing fee equal to up to 1.5% of the subfranchisor's monthly gross revenues.
All payments required under Section 4.2 must be paid to Anago in the manner and according to the procedures designated by Anago, which are subject to change with written notice to the subfranchisor. Anago has the right to require subfranchisor to pay all fees directly via electronic funds transfer (EFT) upon written notice.