What is the consequence if an Aw franchisee fails to pay amounts due to other persons?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- (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;
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, failing to pay amounts due to other persons on three or more separate occasions within a 12-month period can lead to termination of the franchise agreement. This is considered a failure to comply with the agreement, regardless of whether the franchisee corrects the failures after receiving notice.
This provision in the Aw franchise agreement highlights the importance of maintaining good financial standing with all parties, not just the franchisor. It means that a franchisee's failure to pay suppliers, landlords, or other creditors could have serious repercussions for their franchise agreement. The franchisee does not get an opportunity to cure this breach of the agreement.
For a prospective Aw franchisee, this underscores the need for sound financial management and careful attention to payment schedules. It's not enough to simply pay royalties and fees to the franchisor on time; all financial obligations must be met to avoid risking the franchise. This requirement is stricter than some franchise agreements, which may only focus on payments due to the franchisor itself as grounds for termination.