What constitutes grounds for termination of the Aw franchise agreement if the franchisee dies or becomes permanently disabled?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- 14.4 Death or Disability of Franchisee. Upon the death or permanent disability of you (or any of your Owners), the executor or other personal representative of such person must transfer such person's interest within a reasonable time, not to exceed six (6) months from the date of death or permanent disability, to a person approved by us. Such transfers, including, without limitation, transfers by devise or inheritance, will be subject to all the terms and conditions for assignments and transfers contained in Paragraphs 14.2 and 14.3. Failure to transfer such interest within the required period of time will constitute grounds for termination under Section 15. Prior to such transfer, the executor or other personal representative of such person, or the remaining Owners, must appoint a competent manager within a reasonable time, not to exceed thirty (30) days from the date of death or permanent disability. The appointment of this manager is subject to our prior written approval, and this manager must, if requested by us, attend and satisfactorily complete our training program. If Papa Ray's Pizza Restaurant is not being managed by a manager approved by us within thirty (30) days after the death or permanent disability, we are authorized, but we are not required, to immediately appoint a manager to maintain the operations of Papa Ray's Pizza Restaurant. Our appointment of a manager for your Papa Ray's Pizza Restaurant will not relieve you of your obligations under this Agreement, and we will not be liable for any debts, losses, costs or expenses incurred in the operation of your Papa Ray's Pizza Restaurant or to any of your creditors for any products, materials, supplies or services purchased by your Papa Ray's Pizza Restaurant during any period in which it is managed by the manager appointed by us. We have the right to charge a reasonable non-refundable fee for such management services and to cease providing such management services at any time.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the franchise agreement can be terminated if the interest of the deceased or permanently disabled franchisee (or any of their owners) is not transferred within six months. The transfer must be to a person approved by Aw and is subject to the standard assignment and transfer terms outlined in the agreement.
In the event of death or permanent disability, the executor or personal representative must appoint a competent manager within 30 days. This manager requires Aw's written approval and may need to complete Aw's training program if requested. If a manager approved by Aw is not in place within 30 days, Aw has the option to appoint one to maintain operations, but is not obligated to do so.
If Aw appoints a manager, the franchisee remains responsible for all obligations under the agreement. Aw is not liable for any debts, losses, costs, or expenses incurred during the period managed by their appointee, nor are they liable to the franchisee's creditors. Aw can charge a reasonable, non-refundable fee for these management services and can discontinue them at any time. Therefore, it is crucial for potential Aw franchisees to understand these stipulations regarding death or disability and to have a succession plan in place.