What constitutes a breach of the Aw Franchise Agreement regarding transfer of ownership?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
You understand and acknowledge that the rights and duties created by this Agreement are personal to you and we have granted the franchise in reliance upon the individual or collective character, skill, aptitude, attitude, business ability and financial capacity of you (and your Owners). Therefore, except as otherwise provided in Paragraph 14.5 below, neither the franchise, your Papa Ray's Pizza Restaurant or a substantial portion of the assets of your Papa Ray's Pizza Restaurant (or any interest therein) nor any part or all of the ownership of an entity that is the Franchisee may be voluntarily, involuntarily, directly or indirectly, assigned, sold, subdivided, subfranchised or otherwise transferred by you or your Owners (including, without limitation, by merger or consolidation, by issuance of additional securities representing an ownership interest in the Franchisee, or in the event of the death of the Franchisee or an Owner of the Franchisee, by will, declaration of or transfer in trust or the laws of intestate succession) without our prior written
approval. Further, neither your Papa Ray's Pizza Restaurant nor a substantial portion of its assets may be transferred without a concurrent transfer of this Agreement and the franchise rights granted hereunder to the same transferee. Any such assignment or transfer without our prior written approval will constitute a breach of this Agreement and will convey no rights to or interests in the franchise, the franchisee entity, your Papa Ray's Pizza Restaurant or its assets.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, transferring ownership without prior written approval from Aw constitutes a breach of the franchise agreement. Specifically, the franchise, the Papa Ray's Pizza Restaurant, or a substantial portion of its assets cannot be assigned, sold, subdivided, subfranchised, or otherwise transferred without Aw's approval. This restriction applies to both voluntary and involuntary transfers, whether direct or indirect. It includes transfers through merger, consolidation, issuance of additional securities, or inheritance (will, trust, or intestate succession).
Furthermore, the restaurant or its assets cannot be transferred without also transferring the franchise agreement to the same party. Any transfer conducted without Aw's prior written consent is considered a breach of the agreement and will not grant any rights or interests in the franchise, the franchisee entity, the restaurant, or its assets to the unauthorized transferee. This provision underscores Aw's control over who becomes a franchisee and ensures that new operators meet their standards.
This requirement protects Aw by ensuring that any new franchisee meets their standards for operation and financial stability. For a prospective franchisee, this means that selling the business requires a formal process of approval from Aw, and failure to follow this process can result in a breach of contract and potential legal consequences. It is important to note that even if a franchisee dies, the transfer of the franchise through inheritance still requires Aw's approval.