Under what circumstances can Anago terminate a Subfranchise Rights Agreement with cause?
Anago Franchise · 2025 FDDAnswer from 2025 FDD Document
important provisions of the franchise and related agreements. You should read these provisions in the agreements attached to this disclosure document.**
THE FRANCHISE RELATIONSHIP
| f. Termination by franchisor with cause | Article 8 | We may only terminate your Subfranchise Rights Agreement with cause. |
|---|---|---|
| g. "Cause" defined – curable defaults | Section 8.3 | Any default other than those specified in Sections 8.1 and 8.2 of your Subfranchise Rights Agreement may be cured within 30 days of written notice from us of the default. |
| 5. Appointment of a receiver or custodian; | ||
| --- | --- | |
| 6. Filing for composition with creditors; | ||
| 7. Judgment of $5,000 | or more remains | |
| h. "Cause" defined – non-curable defaults | Sections 8.1 and 8.2 | The following defaults may not be cured: 1. Insolvency or general assignment for creditors; 2. Filing in bankruptcy that is not dismissed within 45 days; 3. Adjudication of bankruptcy; 4. Filing for appointment of a receiver or custodian; 5. Appointment of a receiver or custodian; 6. Filing for composition with creditors; 7. Judgment of $5,000 or more remains unsatisfied for 30 days or longer; 8. Execution of levy; 9. Filing of foreclosure suit that is not dismissed within 45 days; 10. Sale of a substantial portion of your assets after levy; 11. Failure to complete training; 12. Knowing or willful violations of laws, rules or regulations, the commission of an illegal act in connection with the sale of a franchise, act of dishonesty, etc.; 13. You or any of your officers, directors, or owners or employees is charged with, pleads guilty or no contest to, or is convicted of a felony, crime or moral turpitude or any other offense that might have a materially adverse affect on the System or the Proprietary Marks; 14. You deny us our right of inspection or audit; 15. Material breach of any obligation to your Unit Franchisees in the Area; 16. You commit any acts involving dishonesty, bad faith, misfeasance, malfeasance, or willful misconduct; 18. Unauthorized assignment or transfer; 19. Breach of confidentiality or non competition provisions of your Subfranchise Rights Agreement; 20. You knowingly maintain false books or record |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 44–52)
What This Means (2025 FDD)
According to Anago's 2025 Franchise Disclosure Document, Anago may terminate a Subfranchise Rights Agreement with cause, as detailed in Article 8. The FDD outlines two categories of defaults that constitute cause for termination: curable defaults and non-curable defaults. For curable defaults, Section 8.3 states that any default, other than those specified in Sections 8.1 and 8.2, may be cured within 30 days of written notice from Anago.
However, certain defaults are considered non-curable under Sections 8.1 and 8.2, leading to immediate termination. These include scenarios such as insolvency, filing for bankruptcy that isn't dismissed within 45 days, adjudication of bankruptcy, or making a general assignment for creditors. The non-curable defaults also encompass the appointment of a receiver or custodian, filing for composition with creditors, or having a judgment of $5,000 or more that remains unsatisfied for 30 days or longer. Other non-curable defaults include execution of levy, filing of a foreclosure suit that is not dismissed within 45 days, sale of a substantial portion of your assets after levy, or failure to complete training.
Further, Anago outlines additional non-curable defaults related to legal and ethical conduct, such as knowing or willful violations of laws, rules, or regulations, committing an illegal act related to franchise sales, or engaging in acts of dishonesty. If the franchisee, or any of their officers, directors, owners, or employees, is charged with, pleads guilty or no contest to, or is convicted of a felony, crime, moral turpitude, or any other offense that might have a materially adverse effect on the Anago system or its Proprietary Marks, it constitutes a non-curable default. Other causes include denying Anago their right of inspection or audit, materially breaching any obligation to Unit Franchisees in the Area, committing acts involving dishonesty, bad faith, misfeasance, malfeasance, or willful misconduct, unauthorized assignment or transfer, breach of confidentiality or non-competition provisions, knowingly maintaining false books or records, repeated complaints from Unit Franchisees, failure to achieve Minimum Annual Performance Requirements, and failure to comply with in-term restrictive covenants.