Can Aw apply payments to past due interest?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- 10.7 Application of Payments. When we receive a payment from you, we have the right in our sole discretion to apply it as we see fit to any past due indebtedness of yours due to us or our affiliates, whether for royalties, Marketing Fund contributions, purchases, interest, or for any other reason, regardless of how you may designate a particular payment to be applied.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw has the right to apply payments from a franchisee to any past due indebtedness. This includes royalties, marketing fund contributions, purchases, and interest, regardless of how the franchisee designates the payment.
This means that if an Aw franchisee has outstanding debts for any reason, Aw can use any payment received to cover those debts first. The franchisee does not have the power to specify which specific invoice or type of debt a payment should cover.
For a prospective Aw franchisee, this highlights the importance of staying current on all payments to Aw. If a franchisee falls behind, Aw has broad discretion to allocate payments in a way that may not be most beneficial to the franchisee. This could result in certain obligations, like current royalties, remaining unpaid, potentially leading to further penalties or even a breach of the franchise agreement.