During the term of the Anago subfranchise agreement, is the Subfranchisor allowed to own more than a 5% beneficial interest in a publicly-held corporation that is a Competitive Business?

According to Anago's 2025 Franchise Disclosure Document, the subfranchise agreement places restrictions on the subfranchisor's involvement with competitive businesses. Specifically, the subfranchisor is restricted from owning, maintaining, operating, engaging in, providing assistance to, consulting with, lending to, leasing any real property to, or having any interest, direct or indirect, or being connected in any other capacity with a Competitive Business within certain geographic areas. These areas include the subfranchisor's designated area, any other Anago subfranchisor's area, or within 20 miles of the perimeter of either of those areas.

However, there is an exception to this restriction. The subfranchisor is permitted to hold a beneficial interest of 5% or less in a publicly-held corporation, even if that corporation is considered a competitive business. This allowance provides some flexibility for the subfranchisor to invest in publicly traded companies without violating the terms of the Anago subfranchise agreement, as long as the ownership stake remains at or below the 5% threshold.

In practical terms, this means that an Anago subfranchisee can invest in a competitor's stock, provided that the competitor is a publicly-held corporation and the subfranchisee's ownership does not exceed 5%. This clause aims to prevent subfranchisees from actively engaging in or supporting competing businesses within Anago's network while still allowing for minor investment opportunities in the stock market.