What does Aw consider an unfair method of competition?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
ion in legal proceedings when you are legally required to disclose it and you have first given us the opportunity to obtain an appropriate legal protective order or other assurance satisfactory to us that the information required to be disclosed will be treated confidentially.
9.3 In-Term Non-competition Agreement. You agree that we would be unable to protect the Confidential Information against unauthorized use or disclosure and would be unable to encourage a free exchange of ideas and information among Papa Ray's Pizza franchisees if franchisees and owners of franchisee were permitted to hold interests in any competitive businesses, as described below. You also acknowledge that we have granted this Franchise Agreement to you in part in consideration of, and in reliance on, your agreement to deal exclusively with us. Therefore, during the term of this Agreement, neither you, nor any Owner, may, either directly or indirectly, for yourself or through, on behalf of, or in conjunction with, any person or legal entity, own, maintain, operate, engage in, consult with or have any interest in (as disclosed or beneficial owner) any business which offers products or services which are the same as, or similar to, those offered by a Papa Ray's Pizza Restaurant, or any entity which is granting franchises or licenses for any business which offers products or services which are the same as, or similar to, those offered by a Papa Ray's Pizza Restaurant. (The ownership of five percent (5%) or less of a publicly traded company will not be deemed to be prohibited by this paragraph). Further, during the term of this Agreement, you will not (1) divert customers or business from your Papa Ray's Pizza Restaurant to any other business or (2) hire any employees of ours, our affiliates or any other franchisees.
10. FEES AND ROYALTIES
10.1 Initial Franchise Fee. You must pay us an initial franchise fee (the "Initial Franchise Fee") of Thirty Thousand Dollars ($30,000.00). Upon signing this Agreement, you must pay us Fifteen Thousand Dollars ($15,000.00) of the Initial Franchise Fee in cash. The balance of Fifteen Thousand Dollars ($15,000.00) is due within five (5) days of our issuance of written approval of the site for your Papa Ray's Pizza Restaurant.
If you are (i) an existing franchisee in good standing under your existing franchise agreements with us purchasing an additional franchise; (ii) a honorably discharged Veteran; or (iii) a current or past employee of ours, our affiliate or one of our franchisees who was so employed
for a minimum of one year, you must pay us an Initial Franchise Fee of Fifteen Thousand Dollars ($15,000.00) in cash in full upon the signing of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, several actions are considered unfair methods of competition during the term of the franchise agreement. Specifically, franchisees and their owners are prohibited from having any interest in a business offering similar products or services to Aw's Papa Ray's Pizza restaurants, or any entity granting franchises or licenses for similar businesses. An exception exists for owning 5% or less of a publicly traded company.
Additionally, franchisees are not allowed to divert customers or business away from their Papa Ray's Pizza Restaurant to another business. They are also prohibited from hiring employees of Aw, its affiliates, or other franchisees. These restrictions are in place to protect Aw's confidential information, encourage the exchange of ideas among franchisees, and ensure franchisees deal exclusively with Aw.
These non-competition terms are designed to protect Aw's market position and prevent franchisees from using the franchisor's resources and knowledge to benefit competing businesses. Prospective franchisees should carefully consider these restrictions, as they significantly limit their ability to engage in other business ventures during the franchise term. It is common in the franchise industry to have in-term and post-term non-compete clauses to protect the brand and system.
Aw also emphasizes that violating these non-compete agreements would cause immediate and irreparable harm, allowing them to seek injunctions against franchisees or owners in violation. Franchisees are responsible for all costs and expenses Aw incurs while enforcing these non-compete agreements, including attorney and expert fees.