What is the amount Aw franchisees must pay for reimbursement of insurance costs?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE1,3 | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| omissions, our enforcement of this Agreement, our defense of our actions taken under this Agreement or your breach of the Franchise Agreement. | |||
| Costs and Attorney's Fees | Will vary under circumstances | As incurred | You must reimburse us for costs and attorney's fees we incur in actions against you to enforce the Franchise Agreement. |
| Reimbursement for insurance costs | Costs and premiums incurred by us on your behalf. | Upon demand | Payable if we incur costs to purchase insurance for you if you fail to do so. |
| Reimbursement of Taxes | Actual assessed taxes against us for your operation of your business or on any payments you make to us. | Upon demand | Only payable if taxes of this type are assessed against us. |
| Software license fees | Undetermined since proprietary software has not yet been developed. | As arranged | Payable if we develop proprietary software that you must use for operating your Papa Ray’s Pizza Restaurant. |
Source: Item 6 — OTHER FEES (FDD pages 13–16)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, franchisees may have to reimburse Aw for insurance costs. The amount will be the 'costs and premiums incurred' by Aw on the franchisee's behalf. This reimbursement is payable upon demand, and only if Aw incurs costs to purchase insurance for the franchisee because the franchisee failed to do so themselves.
This means that as a prospective Aw franchisee, you are responsible for securing your own insurance coverage. However, if you fail to obtain the necessary insurance, Aw has the right to purchase it for you and then demand reimbursement from you for the costs and premiums they incurred. This is a fairly standard practice in franchising, as franchisors need to ensure that all franchise locations have adequate insurance coverage to protect the brand and the system as a whole.
The fact that the reimbursement is 'upon demand' means Aw can request immediate payment. Therefore, it is crucial for franchisees to maintain adequate insurance coverage to avoid this situation. Failure to promptly reimburse Aw for these costs could potentially lead to further action from the franchisor, including potential breach of contract.
It is important to note that the FDD does not specify the types or amounts of insurance coverage required. This information would likely be detailed elsewhere in the Franchise Agreement or in a separate operations manual. Prospective franchisees should carefully review these documents and discuss insurance requirements with Aw during their due diligence process.