What are the conditions under which an existing Papa Ray's Pizza Restaurant franchisee receives a discounted initial franchise fee for Aw (Item 5), and how does this impact their obligations under the franchise agreement (Item 9)?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
ITIAL FEES**
You must pay an initial franchise fee of $30,000. It is due and payable in a lump sum by certified or cashier's check upon signing the Franchise Agreement. The franchise fee is not refundable under any circumstances.
The following franchisees will pay a discounted initial franchise fee of $15,000:
- (1) an existing Papa Ray's Pizza Restaurant franchisee currently operating a Papa Ray's Pizza Restaurant in compliance with the franchise agreement;
- (2) a honorably discharged Veteran;
- (3) a current or past employee of ours, an affiliate or one of our franchisees who was so employed for a minimum of one year.
The $15,000 non-refundable initial franchise fee must be paid in cash in full when the franchise agreemen
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, an existing Papa Ray's Pizza Restaurant franchisee may qualify for a discounted initial franchise fee of $15,000, provided they are currently operating a Papa Ray's Pizza Restaurant and are in compliance with their existing franchise agreement. The standard initial franchise fee is $30,000, making this a substantial discount for eligible franchisees. This reduced fee is non-refundable and must be paid in full when the franchise agreement is signed.
Item 22 outlines various obligations and conditions within the franchise agreement, but it does not explicitly state how receiving a discounted initial franchise fee impacts a franchisee's obligations. However, the document does state that all franchisees, regardless of whether they paid a discounted initial fee, must adhere to the standard terms and conditions of the franchise agreement. These obligations include, but are not limited to, royalty fees, marketing contributions, and compliance with brand standards.
While the FDD does not specify altered obligations for franchisees receiving the discounted fee, it is crucial for prospective franchisees to understand all the standard obligations outlined in the franchise agreement. These include in-term non-competition agreements, royalty fees of 5% of gross revenue, and a national marketing fund contribution of 2% of gross revenue. Franchisees should carefully review Item 22 and other relevant sections of the FDD to fully understand their commitments and responsibilities under the Aw franchise agreement.