What agreements might an assignee be required to execute when taking over an Aw franchise?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
r approval of an assignment, provided that the proposed assignee is, in our opinion, of good moral character and has sufficient business experience, aptitude and financial resources to own and operate a Pap Ray's Restaurant, does not have any conflicting interests unacceptable to us, and otherwise meets our then applicable standards for franchisees. In addition the following conditions must be met prior to, or concurrently with, the effective date of the assignment:
- (a) all obligations of you and your Owners incurred in connection with this Agreement have been assumed by the assignee and, as applicable, its owners;
- (b) you have paid such royalty fees, marketing fund contributions, amounts for purchases and any other amounts owed to us or our affiliates which are then due and unpaid;
- (c) the assignee completes the initial training program required of new franchisees to our satisfaction;
- (d) if required, the lessor of the Premises has consented to your assignment or sublease of the Premises to the proposed assignee;
- (e) the assignee (and, if an entity, its direct or indirect owners) have, at our option, executed and agreed to be bound by either: (a) the form of franchise agreement, owner guarantees and such other ancillary agreements as are then customarily used by us in the grant of franchises for a Papa Ray's Pizza Restaurant, which may provide for royalty fees, marketing fund contributions and other fees and terms and conditions that differ from those contained in this Agreement;
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, an assignee taking over an Aw franchise may be required to execute certain agreements. Specifically, the assignee (and, if an entity, its direct or indirect owners) may be required, at Aw's option, to execute and agree to be bound by either the then-current form of franchise agreement, owner guarantees, and other ancillary agreements, or an assignment and assumption agreement satisfactory to Aw, where the assignee assumes the existing franchisee's obligations. The new franchise agreement may include different royalty fees, marketing fund contributions, and other fees and terms and conditions than the original agreement.
In addition to the above, the assignor (the original franchisee) and their owners may be required to execute a general release of any and all claims against Aw and its affiliates, officers, directors, employees, and agents, unless limited or prohibited by applicable law. The assignor must also enter into an agreement with Aw ensuring that any installment payments from the assignee to the assignor are subordinate to the assignee's ongoing obligations to Aw, such as royalty fees, marketing fund contributions, and purchase obligations.
Furthermore, Aw must approve the material terms and conditions of the assignment, including determining that the price and payment terms will not adversely affect the Papa Ray's Pizza Restaurant's future operations. The assignee or assignor may also be required to make reasonable capital expenditures to upgrade, remodel, and/or redecorate the premises to reflect the then-current image of a Papa Ray's Pizza Restaurant. These conditions ensure that Aw maintains control over its brand standards and financial interests during the transfer of a franchise.