What rights does Anago Franchisor have upon the occurrence of any Event of Default?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
If You are in default We may, at Our option, terminate all rights granted to You under this Agreement, without affording You an opportunity to cure the default, effective immediately upon notice to You, upon the occurrence of any of the following Events of Default:
- (a) If You cease to perform contracted service to the Accounts for more than 3 consecutive days without Our consent;
- (b) If You fail or refuse to comply with any mandatory specification, standard or operating procedure We require in this Agreement, in the Manual or otherwise in writing, on the cleanliness or sanitation of the Anago Unit Franchise;
- (c) If You, or Your officer, director, owner or managerial employee is convicted of a felony, a crime of moral turpitude or any other crime or offense that We reasonably believe is likely to have a material adverse effect on the System, the Proprietary Property, the goodwill associated with the Proprietary Property, or Our interest in any of the Proprietary Property, unless You immediately and legally terminate the individual as an officer, director, owner and employee;
- (d) If You deny Us the right to inspect the Anago Unit Franchise or to audit the Records of the Anago Unit Franchise;
- (e) If You engage in conduct that is harmful to or reflects unfavorably on You or the System in that the conduct exhibits a reckless disregard for the physical or mental well-being of employees, Clients, Our representatives or the public at large, including battery, assault, sexual harassment or discrimination, racial harassment or discrimination, alcohol or drug abuse or other forms of threatening, outrageous or unacceptable behavior as determined in Our sole discretion;
- (f) If You, contrary to this Agreement, purport to encumber or transfer any rights or obligations under this Agreement (including transfers of any interest in You), without Our written consent;
- (g) If any breach occurs under Sections 6.2 or 13.1 concerning confidentiality and noncompetition covenants;
- (h) If You knowingly maintain false Records, or knowingly submit any false Records to Us;
- (i) If You misuse or make any unauthorized use of the Proprietary Property or otherwise materially impair the goodwill associated with the Proprietary Property or Our rights in the Proprietary Property;
- (j) If You receive from Us 3 or more Notices of Default for the same or similar defaults during any 12 consecutive months, even if all defaults were cured;
- (k) If You lose or voluntarily cease service to all Anago contracts You have agreed to service, and subsequently fail to complete corrective measures classes with 90 days of notice to
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, several consequences can arise if a franchisee defaults. Anago can terminate the franchise agreement, potentially without an opportunity for the franchisee to cure the default, depending on the nature of the event. These events include ceasing services to accounts for more than three days without consent, failing to comply with cleanliness standards, conviction of a felony, denying inspection rights, engaging in harmful conduct, unauthorized transfer of rights, breaches of confidentiality or noncompetition, maintaining false records, misusing proprietary property, receiving three or more default notices in 12 months, or losing service to all Anago contracts without corrective measures.
If a franchisee fails to cure a default within the specified cure period, all rights under the agreement terminate immediately without further notice. Anago can also retain all fees paid, except for refunds expressly required in the agreement, and the franchisee must pay all outstanding amounts owed to Anago, its affiliates, and other creditors within ten days of termination or expiration. The franchisee must immediately cease operating the Anago Unit Franchise, discontinue using proprietary marks, and transfer websites and social media accounts to Anago.
Additionally, the agreement automatically terminates without notice if the franchisee damages the Anago system through environmental law violations, becomes insolvent, files for bankruptcy, is adjudicated bankrupt, has a receiver appointed, begins proceedings for composition with creditors, has an unsatisfied judgment over $5,000 for 30 days, faces execution levied against their property, or sells a substantial portion of their property after levy. The franchisee is required to notify Anago within three days of any of these events. Anago also owns all rights to clients and client accounts upon default, termination, or expiration of the agreement.
If the subfranchise rights agreement is terminated, the franchise agreement will also terminate, unless AFI assumes Anago's rights and obligations. Failure to meet conditions for a successor Anago Subfranchise Rights Agreement allows Anago to deny the successor agreement and exercise all rights afforded upon termination. These stipulations are typical in franchising, designed to protect the brand and system standards, but franchisees should be aware of the breadth of actions that can trigger a default and the severe consequences that can follow.