Can Aw apply payments to past due royalties?
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 discretion to apply payments received from a franchisee to any outstanding debts. This includes past due royalties, marketing fund contributions, purchases, interest, or any other reason, regardless of how the franchisee designates the payment.
This means that if an Aw franchisee has multiple outstanding debts to Aw, Aw can choose how to allocate any payment received. This is significant for franchisees as it means Aw can apply payments to older, possibly disputed debts, rather than the most recent obligations.
For a prospective Aw franchisee, this highlights the importance of staying current on all payments to Aw. If a franchisee falls behind, Aw has the power to decide how any subsequent payments are applied, potentially leading to further late fees and interest charges on other outstanding balances. Franchisees should maintain detailed records of all payments and outstanding balances to ensure accurate accounting and to address any discrepancies promptly.