What is the consequence if an Aw franchisee fails to comply with any operating procedures?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
rom the construction, maintenance or operation of your Papa Ray's Pizza Restaurant and upon receipt of written or oral notice from us or governmental authority of the existence of such threat or danger, you fail to immediately cease any activity or conduct causing the threat or danger and fail to complete the cure of such breach within twenty-four (24) hours;
- (i) fail on three (3) or more separate occasions within any twelve (12) consecutive month period to submit when due financial statements, reports or other data, information or supporting records, to pay when due the royalty fees, marketing fund contributions, other payments due to us or to pay amounts due to other persons, or otherwise fail to comply with this Agreement, or with any mandatory specification, standard or operating procedures we prescribe from time to time, whether or not such failures to comply are corrected after notice of those failures to comply is delivered to you; and
(j) fail on two (2) or more occasions during any calendar year to attend and complete any mandatory supplemental education or conference required by Paragraph 5.3 or Paragraph 5.4 of this Agreement.
This Agreement will expire automatically without notice upon the presentation for filing by you (or any of your Owners) of a petition or application seeking any type of relief under the Federal Bankruptcy Act or any state insolvency or similar law.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, failing to comply with operating procedures can lead to termination of the franchise agreement. Specifically, if a franchisee fails on three or more separate occasions within a 12-month period to comply with any mandatory specification, standard, or operating procedures, Aw can terminate the agreement. This applies whether or not the failures are corrected after notice is delivered.
Aw also has the right to terminate the agreement if a franchisee fails to comply with any provision of the agreement or any mandatory specification, standard, or operating procedure, and does not correct such failure within 30 days after written notice. However, if the breach cannot be reasonably cured within 30 days, and the franchisee commences a bona fide program to cure the breach within 30 days and continues to take necessary actions to complete the cure, they will be given a reasonable amount of time to complete the cure. If the franchisee fails to continue the necessary action or does not complete the cure within a reasonable period, Aw may terminate the agreement upon written notice.
These stipulations highlight the importance of adhering to Aw's standards and procedures. Franchisees should ensure they understand and consistently implement all operational requirements to avoid potential termination of their franchise agreement. The cure periods offer some protection, but consistent failures, even if corrected, can still lead to termination. This underscores the need for careful management and oversight of the franchise to maintain compliance and protect the franchisee's investment.