What is Exhibit 3 to the Aw Franchise Agreement related to?

According to Aw's 2025 Franchise Disclosure Document, Exhibit 3 to the Franchise Agreement pertains to the Collateral Assignment of Lease. This means that as part of the franchise agreement, the franchisee may be required to assign their lease to Aw as collateral. This assignment provides Aw with additional security, allowing them to potentially take over the lease if the franchisee defaults on their obligations under the Franchise Agreement.

For a prospective Aw franchisee, this implies that the lease agreement for their restaurant location will be subject to review and approval by Aw. Furthermore, the franchisee should understand the terms of the Collateral Assignment of Lease, particularly the conditions under which Aw could assume control of the lease. This is a significant consideration, as the location is critical to the success of the franchise, and losing control of the lease could have severe consequences.

Collateral assignments of leases are not uncommon in franchising, especially for businesses that require a specific type of location. It is essential for the franchisee to carefully review this exhibit with legal counsel to fully understand their rights and obligations. The franchisee should also inquire about Aw's track record regarding lease assignments and what specific events would trigger Aw to exercise its rights under the collateral assignment.