Can Aw change other fees and terms in the new franchise agreement for the assignee?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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; or (b) an assignment and assumption agreement satisfactory to us whereby the assignee assumes your obligations under this Agreement;
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw has the option to require the assignee to execute the franchise agreement that is then-currently used for new franchisees, which may include different fees and terms. Specifically, Aw can require the assignee to agree to be bound by either the current franchise agreement with potentially different terms or an assignment and assumption agreement that is satisfactory to Aw, where the assignee assumes the original franchisee's obligations.
This means that if a franchisee sells their Aw franchise, the buyer (assignee) might not get the exact same financial terms as the original franchisee. Aw could increase royalty fees, marketing fund contributions, or other fees. They could also change other operational terms and conditions in the new franchise agreement.
For a prospective buyer of an existing Aw franchise, this highlights the importance of carefully reviewing the terms of the new franchise agreement offered by Aw. The buyer should not assume they will be able to operate under the same financial or operational terms as the seller. This clause gives Aw considerable flexibility in setting the terms for the new franchisee, which could impact the profitability and operations of the franchise.