Can Aw change the royalty fees 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-current, which may include different royalty fees. Specifically, Aw can require the assignee to agree to be bound by either the current franchise agreement, or an assignment and assumption agreement. The then-current franchise agreement may provide for different royalty fees, marketing fund contributions, and other fees and terms and conditions.
This means that if you are looking to sell your Aw franchise, the potential buyer may be subject to a different royalty fee structure than what you currently have. This could impact the attractiveness of your franchise to potential buyers, as it could increase their operating costs.
As a prospective franchisee, it's important to understand that Aw retains significant control over the assignment process and can impose new terms and conditions on the assignee. This highlights the importance of carefully reviewing the franchise agreement and understanding the conditions under which you can transfer your franchise.