After the termination of the Anago subfranchise agreement, is a Subfranchisor allowed to solicit Business Affiliates of Anago to terminate their relationship with Anago?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
Section 9.4 - Cessation of Operation
- (a) Subfranchisor will immediately cease operation of the Subfranchise Business and shall not directly or indirectly, at any time or in any manner identify itself or any business as a current or former Anago Subfranchise, franchisee, licensee or dealer of, or otherwise associated with, Franchisor or the System. Without limiting the generality of the foregoing, Subfranchisor shall immediately: (i) cease selling Unit Franchises for the Franchisor; (ii) cease using all advertising materials, forms and other materials bearing the Proprietary Marks; (iii) cease holding itself out as a Subfranchisor of Franchisor; (iv) take all steps necessary to disassociate itself from Franchisor and the System; (v) cease solicitations of Clients; (vi) cease all communication with all Clients; (vii) cease providing services to Unit Franchisees; and (viii) promptly and at its own expense make the alterations Franchisor may specify in the Anago Manuals (or otherwise) to distinguish the Premises clearly from its former appearance in order to prevent public confusion. Franchisor is free to sell new Unit Franchises, enter into new Subfranchise rights agreements or other arrangements in the Area without any obligation to the Subfranchisor. Subfranchisor shall immediately assign all Client Accounts to Franchisor in accordance with Section 9.5 below.
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, Section 9.4(a) dictates the cessation of operations for a Subfranchisor upon termination of the Subfranchise Agreement. Specifically, the Subfranchisor must immediately cease operation of the Subfranchise Business and is prohibited from identifying themselves or any business as a current or former Anago Subfranchise.
This section explicitly states that the Subfranchisor must cease solicitations of Clients and all communication with all Clients. While this clause directly addresses Clients, the FDD does not explicitly state whether a Subfranchisor is prohibited from soliciting Business Affiliates of Anago to terminate their relationship with Anago after the termination of the subfranchise agreement.
Therefore, it would be prudent for a prospective Anago franchisee to seek clarification from the franchisor regarding the specific restrictions placed on a former Subfranchisor's ability to solicit Anago's Business Affiliates post-termination. Understanding the extent of these limitations is crucial for assessing potential competitive challenges and protecting the Anago network.