Under what circumstances will the Anago Subfranchise Agreement automatically terminate without notice?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
t individual in a corporate, partnership or limited liability company Unit Franchisee (or in any owner of the Unit Franchisee) or in this Agreement are required to be transferred within 6 months of the death to an approved transferee in accordance with the terms of this ARTICLE.
ARTICLE 11 - DEFAULT AND TERMINATION
SECTION 11.1 TERMINATION BY YOU.
You do not have the right to terminate the Agreement prior to its expiration without written consent from Us.
SECTION 11.2 TERMINATION BY US - WITHOUT NOTICE.
- (a) Subject to applicable law, this Agreement automatically terminates without notice or opportunity to cure on the date of the occurrence of any of the following Events of Default:
- (i) if You damage the Anago System through violation of federal, state or local environmental laws;
- (ii) if You become insolvent or make a general assignment for the benefit of creditors;
- (iii) You file a petition in bankruptcy or a petition is filed against or consented to by You and the petition is not dismissed within 45 days;
- (iv) You are adjudicated as bankrupt;
- (v) a bill in equity or other proceeding for the appointment of a receiver or other custodian for Your business or assets is filed or consented to by You;
- (vi) a receiver or other custodian (permanent or temporary) of Your business or assets is appointed by any court of competent jurisdiction;
- (vii) proceedings for a composition with creditors under federal or any state law is begun by or against You;
- (viii) a final judgment in excess of $5,000 remains unsatisfied or of record for 30 days or longer (unless a supersedes bond is filed);
- (ix) execution is levied against Your operation or property, or suit to foreclose any lien or mortgage against the Premises or Your assets is begun against You and not dis
Source: Item 23 — RECEIPTS (FDD pages 62–298)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, the Subfranchise Agreement can automatically terminate without notice if certain events of default occur. These events include damaging the Anago system through violation of environmental laws, becoming insolvent, making an assignment for the benefit of creditors, or filing for bankruptcy. If a bankruptcy petition is filed against the franchisee and not dismissed within 45 days, this also triggers automatic termination.
Additional conditions that lead to automatic termination involve the appointment of a receiver or custodian for the franchisee's business or assets, proceedings for composition with creditors, or having a final judgment exceeding $5,000 that remains unsatisfied for 30 days or longer (unless a supersedeas bond is filed). Furthermore, if execution is levied against the franchisee's operation or property, or a suit to foreclose any lien or mortgage against the premises or assets is initiated and not dismissed within 45 days, the agreement will automatically terminate. Finally, the agreement terminates automatically if a substantial portion of the franchisee's real or personal property used in the Anago Unit Franchise is sold after levy by any sheriff, marshal, or constable.
It is important to note that the franchisee is obligated to notify Anago within 3 days of any of these events occurring. Additionally, if the Subfranchise Rights Agreement is terminated, the Subfranchise Agreement will also terminate, although AFI (presumably Anago Franchising, Inc.) has the option to assume Anago's rights and obligations under the agreement. These terms highlight the importance of financial stability and legal compliance for Anago franchisees to maintain their franchise agreement.