What constitutes unfair competition by a former Aw franchisee?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
ly similar to a Papa Ray's Pizza Restaurant concept then being offered by us (except other Papa Ray's Pizza Restaurants you are operating pursuant to franchise agreements with us), which is located (i) within ten (10) miles of the Premises of your Papa Ray's Pizza Restaurant or (i) within ten (10) miles of the premises of any other Papa Ray's Pizza Restaurant,
- or (b) any entity which is granting franchises or licenses or entering into joint venture relationships for any restaurant business which offers products or services similar to those offered by a Papa Ray's Pizza Restaurant, other than the ownership of securities traded on a stock exchange or on the over-the-counter market that represent 5% or less of that class of securities.
- (b) directly or indirectly divert or attempt to divert any former business or customer of your Papa Ray's Pizza Restaurant to any competitive business;
- (c) employ or seek to employ any person employed by us or our affiliate, or otherwise directly or indirectly induce or seek to induce such person to leave his or her employment; and
- (d) directly or indirectly, solicit or sell products or services to any former customer of your Papa Ray's Pizza Restaurant.
- 17.2 Court Modification of Agreement. You agree that this form of Agreement is prepared for use in many jurisdictions with differing public policies and that such public policies change. Accordingly, you agree that the prevailing non-competition restrictions set forth above may be modified by a Court to the extent necessary to make the non-competition agreements valid and enforceable against you.
- 17.3 Enforcement of Covenants Not to Compete. You acknowledge that violation of the covenants not to compete contained in this Agreement would result in immediate and irreparable injury to us for which no adequate remedy at law will be available. Accordingly, you hereby acknowledge that we may seek to obtain the entry of an injunction prohibiting any conduct by you or your Owners in violation of the terms of the covenants not to compete set forth in 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 by a former franchisee can be considered unfair competition. These include engaging in specific activities that could harm Aw's business interests after the franchise agreement ends.
Specifically, a former Aw franchisee is prohibited from being involved with any entity that grants franchises or licenses for a restaurant business offering similar products or services to Aw, unless they own 5% or less of the securities of a publicly traded company. They cannot directly or indirectly attempt to divert former customers of their Aw restaurant to a competitive business. Additionally, they are barred from employing or trying to employ anyone working for Aw or its affiliates, or from inducing them to leave their employment. Soliciting or selling products or services to former customers of the Aw restaurant is also considered unfair competition.
Aw emphasizes the importance of these non-compete agreements, stating that violations would cause immediate and irreparable harm for which monetary compensation would be inadequate. Therefore, Aw reserves the right to seek a court injunction to prevent any conduct that violates these terms. The FDD also stipulates that any violation of these non-compete terms may be presumed to involve the unlawful use of Aw's confidential information.
Furthermore, the existence of any claims the franchisee may have against Aw does not serve as a defense against the enforcement of these non-compete agreements. The franchisee is also responsible for covering all costs and expenses, including attorney and expert fees, that Aw incurs while enforcing these non-compete terms. This highlights the serious legal and financial implications for franchisees who violate these post-termination restrictions.