Are there any restrictions on the customers to whom an Anago franchisee may sell Unit Franchisees and service contracts?

According to Anago's 2025 Franchise Disclosure Document, a subfranchisee is generally not restricted in the customers to whom they may sell Unit Franchisees and service contracts within their designated area, provided those customers meet Anago's minimum standards as outlined in the current Unit Franchise Agreement. This means Anago subfranchisees have a relatively open market to find and recruit individuals or companies to become Unit Franchisees.

However, Anago subfranchisees are not permitted to solicit Unit Franchisees or clients outside their designated area. This restriction includes various channels of distribution, such as the Internet, catalogs, telemarketing, or other direct marketing methods. Anago also retains specific rights regarding National Accounts, defining them as clients with multiple locations, especially those with ten or more locations in the subfranchisee's area, or those who solicit proposals that Anago determines the subfranchisee is not qualified to handle.

Anago subfranchisees must refer all National Accounts to Anago and cannot enter into contracts with them without prior written consent. If Anago secures a contract with a National Account in the subfranchisee's area, Anago may offer the subfranchisee the option to license Unit Franchisees to service those locations, under terms and conditions specified by Anago and on a non-exclusive basis. This carve-out for National Accounts is a significant exception to the general freedom in customer selection, as it allows Anago to manage larger, multi-location clients directly, potentially impacting the subfranchisee's revenue and growth opportunities.

Therefore, while Anago subfranchisees have flexibility in selling Unit Franchises and service contracts, they must adhere to Anago's standards for franchisees, respect territorial boundaries, and defer to Anago for National Accounts. Prospective subfranchisees should carefully consider these restrictions and understand the potential impact on their business development strategy and revenue generation.