Is Anago required to approve a transfer of interest in the franchise agreement?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
umption, You agree within 7 days of a request to sign a release of Us except for any liabilities from which We may not be released under any applicable law. We can also transfer Our stock, engage in public and private securities offerings, merge, consolidate, acquire other businesses including Competitive Businesses, sell all or substantially all of Our assets, borrow money (secured or unsecured), deal in Our assets or otherwise operate Our business without Your consent.
SECTION 10.2 YOUR TRANSFER.
(a) Personal Rights. The rights and duties stated in this Agreement are personal to You. We have granted the Unit Franchise in reliance on Your business and personal skill, reputation, aptitude and financial capacity. Accordingly, You agree that, unless otherwise expressly permitted by this Agreement, You will not sell, assign, transfer, convey or give voluntarily, involuntarily, directly or indirectly, by operation of law or otherwise (collectively "transfer") any direct or indirect interest in (1) this Agreement, (2) any Account or interest in any Account assigned to You under this Agreement or with respect to which you sign a joinder, or (3) the Unit Franchise without Our prior written consent (that may be granted or withheld by Us in Our sole discretion). However, Our written consent is not required for: (i) a transfer of less than a 5% interest in a publicly held corporation; or (ii) a transfer of all or any part of Your interest to one of Your other original shareholders or partners. A transfer of 25% or more of the voting or ownership interests in Your corporation, partnership or limited liability company, individually or in the aggregate, directly or indirectly, is, for all purposes of this Agreement, considered Your transfer of an interest in this Agreement. Any purported transfer by You, by operation of law or otherwise in violation of this Agreement, is void and is an Event of Default.
(b) Transfer to Your Corporation. This Agreement may be assigned to a corporation where You own all of the issued and outstanding capital stock if:
- (i) You actively manage the corporation and continue to devote Your best efforts to the full exploitation of the Anago Unit Franchise and to the day-to-day operation and development of the Anago Unit Franchise;
- (ii) The corporation is newly organized;
- (iv) The corporation cannot use the name "Anago" in any derivative or form in the corporate name;
- (iv) An authorized officer of the corporation signs a document in a form We approve, agreeing to become a party bound by all the provisions of this Agreement;
- (i) You actively manage the corporation and continue to devote Your best efforts to the full exploitation of the Anago Unit Franchise and to the day-to-day operation and development of the Anago Unit Franchise;
(v) We approve a personal guaranty and agreement not to sell, assign, pledge, mortgage or otherwise transfer or encumber the stock of the corporation;
(vi) All stock certificates representing shares bear a legend that they are subject to this Agreement;
- (vii) You pay to Us our then current administrative fee (currently, $250); and
(viii) You and the corporation execute our then current form of Assignment & Assumption Agreement, the current form of which is attached as Exhibit 11 to this Agreement.
(c) No Subfranchising Rights. You have no right to grant a Subfranchise.
(d) No Encumbrance. You agree that Your rights under this Agreement and any voting or ownership interest of more than 25% in a corporate, partnership or limited liability company Unit Franchisee (or in any owner of the Unit Franchisee) may not be pledged, mortgaged, hypothecated, given as security for an obligation or encumbered. Any attempted encumbrance is void and is an Event of Default.
(e) Permitted Transfer. We may consent to a transfer of any interest in this Agreement if the following requirements are satisfied or waived by Us in Our sole discretion:
- (i) You are not in default of any provision of this Agreement or any other agreement between You and Us or Our Business Affiliates;
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, Anago requires prior written consent for any transfer of interest in the franchise agreement, any account assigned to the franchisee, or the unit franchise itself. This consent can be granted or withheld at Anago's sole discretion. This means that a franchisee cannot sell, assign, or transfer their franchise to someone else without Anago's approval. A transfer of 25% or more of the voting or ownership interests in the franchisee's corporation, partnership or limited liability company is considered a transfer of interest in the agreement. Any transfer without Anago's consent is considered void and an event of default.
There are a couple of exceptions to this rule. Anago's written consent is not required for (i) a transfer of less than a 5% interest in a publicly held corporation; or (ii) a transfer of all or any part of Your interest to one of Your other original shareholders or partners.
If a franchisee wants to transfer their franchise, the potential transferee must meet several conditions. The transferee must interview at Anago's principal office, complete the application process, and demonstrate that they have the necessary business skills, reputation, and financial capacity. The transferee must also complete the Anago Orientation Program and demonstrate their ability to comply with the franchise agreement. Additionally, the transferee must sign Anago's current franchise agreement, which may have different terms than the original agreement. The transferee also needs to pay a transfer fee of the greater of $2,000, or 10% of the sales price, in lieu of the Initial Fee. If the transferee is a spouse or child of the transferor, no Transfer Fee will be charged but a reasonable administrative fee (currently $250) will be charged.
Anago approval of a transfer does not mean that Anago believes the terms of the transfer are appropriate or that the transferee will be successful. Anago's consent to a transfer does not waive any claims they may have against the franchisee or their right to demand compliance with the agreement. Even if a transfer is approved, the franchisee remains liable for their conduct before the transfer, including any breaches of the agreement.