Can Aw engage in business activities not expressly prohibited by the franchise agreement?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- (c) establish businesses which are franchised, licensed or owned by us or any affiliate at any locations we deem appropriate or distribute products or services which are similar to the products and services offered under the System under trade names, trademarks, service marks, trade dress or other commercial symbols other than the Marks.
- (d) to acquire or be acquired by a company establishing businesses identical or similar to the Papa Ray's Pizza Restaurants, even if the other business operates, franchises, and/or licenses competitive businesses anywhere, including your Protected Area; and
- (e) to engage in any other business activities not expressly prohibited by this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw retains the right to engage in business activities that are not expressly prohibited by the franchise agreement. Specifically, Aw can establish franchised, licensed, or owned businesses at any location they deem appropriate. They can also distribute products or services similar to those offered under the Aw system, using different trade names or trademarks. Furthermore, Aw has the right to acquire or be acquired by a company that establishes businesses identical or similar to Aw restaurants, even if these businesses operate competitive franchises or licenses anywhere, including a franchisee's protected area.
This clause provides Aw with significant flexibility in its business operations and future growth strategies. For a prospective franchisee, this means that Aw could potentially operate businesses that compete with their franchise, although under different branding. This could impact the franchisee's market share and profitability, especially if such businesses are located near the franchisee's protected area.
It is important for potential franchisees to understand the implications of this clause. While the franchise agreement may grant a protected area, Aw's ability to operate similar businesses under different brands could still lead to competition. Franchisees should carefully consider this aspect and evaluate the potential impact on their investment before entering into a franchise agreement with Aw. Understanding the scope of activities Aw can undertake outside of the franchise agreement is crucial for assessing the overall risk and opportunity associated with the franchise.