What covenants must the owners of an Aw entity franchisee comply with?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are an entity, your owners must not only personally guarantee your obligations under the Franchise Agreement, but must also agree to be bound by, and personally liable for the breach of, every provision in these agreements, both monetary obligations and obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities, including the preservation of the confidentiality of our confidential information as defined in the Franchise Agreement and compliance with the covenants not to compete described in Item 17. The "Guaranty and Assumption of Obligations" is an exhibit to the Franchise Agreement.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 32–33)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, if the franchisee is an entity, the owners must personally guarantee the franchisee's obligations under the Franchise Agreement. This means the owners are not only guaranteeing the financial obligations but also agreeing to be bound by every provision in the agreements. These provisions include obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities.
Specifically, owners must preserve the confidentiality of Aw's confidential information as defined in the Franchise Agreement. They must also comply with the covenants not to compete described in Item 17 of the FDD. This non-compete agreement restricts the owner's involvement in similar businesses during and after the franchise term.
Furthermore, Aw owners must comply with Anti-Terrorism Laws. Any violation of these laws or any "blocking" of assets under these laws constitutes grounds for immediate termination of the Franchise Agreement. This highlights the importance of due diligence and adherence to legal and ethical standards for all Aw franchisees and their owners.