What financial instruments potentially expose Aw to concentration of credit risk?

According to Aw's 2025 Franchise Disclosure Document, the financial instruments that potentially expose the company to a concentration of credit risk primarily consist of cash and cash equivalents. The FDD states that the balances in Aw's cash accounts did not exceed the Federal Deposit Insurance Company's (FDIC) insurance limit of $250,000, and the company maintains its cash and cash equivalents with accredited financial institutions. This suggests that Aw's risk is mitigated by FDIC insurance coverage and by using reputable financial institutions.

For a prospective Aw franchisee, this information indicates that Aw is aware of and manages its credit risk exposure related to cash holdings. The fact that cash balances are below the FDIC limit implies that Aw is not exposed to significant risk of loss due to bank failure. Maintaining accounts with accredited financial institutions further reduces this risk.

However, franchisees should be aware that while Aw takes steps to manage its own credit risk, this does not directly protect the franchisee's own financial instruments. Franchisees should ensure they also manage their own cash and cash equivalents in a prudent manner, considering FDIC insurance limits and the creditworthiness of their own financial institutions. Franchisees should also inquire about Aw's policies for handling franchisee payments and how those funds are managed to further understand any potential indirect exposure.