Can Aw apply payments to past due Marketing Fund contributions?
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 franchisees to any past due indebtedness. This includes royalties, Marketing Fund contributions, purchases, or interest, regardless of how the franchisee designates the payment. This gives Aw considerable discretion in managing payments and ensuring that all outstanding debts are addressed.
For a prospective Aw franchisee, this means that if you have any outstanding payments, Aw can allocate any payment you make to those debts, even if you intended the payment to cover current fees. This could potentially lead to a situation where current obligations become past due if Aw applies your payment to older debts.
This policy is fairly common in franchising, as it protects the franchisor's financial interests and ensures that all debts are settled. However, it's crucial for franchisees to maintain accurate records and communicate clearly with Aw regarding payment allocations to avoid misunderstandings or penalties, such as interest on late payments. Franchisees should strive to keep all accounts current to avoid Aw from exercising this right.