Does the Aw franchise agreement allow for any exceptions to the prohibition of wholesale activities?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
ation, and localized signs. The purpose of this restriction includes, but is not limited to, preventing confusion in the market place among Papa Ray's Pizza franchisees soliciting the same customers.
- 2.6 Wholesale Activities Prohibited. You agree to engage only in the retail sale of the products and services which comprise the System, and you agree not to engage in the wholesale sale and/or distribution of any product offered for sale through the Papa Ray's Pizza Restaurant. "Wholesale sale and/or distribution" shall mean any sale and/or distribution of product by you to a third party for resale, retail sale or further distribution by such third party. You shall not sell any products offered for sale through the Papa Ray's Pizza Restaurant through any Alternative Distribution Channels.
- 2.7 Minimum Annual Gross Revenue. Beginning with the second year of operation of the Papa Ray's Pizza Restaurant, you must have annual Gross Revenue for each year of operation of a minimum of Three Hundred Thousand Dollars ($300,000.00) ("Minimum Annual Gross Revenue"). If you do not achieve the Minimum Annual Gross Revenue for any year of operation,
you will be given the next twelve (12) months to increase revenues so that you meet the Minimum Annual Gross Revenue. If you do not meet the Minimum Annual Gross Revenue after having been given a twelve (12) month period to increase sales and achieve the Minimum Annual Gross Revenue, we may either (i) increase the amount that you must expend on local advertising pursuant to Paragraph 12.2 herein to an amount we in our discretion deem necessary in order to increase revenues, (ii) reduce or eliminate your Protected Area upon delivery of written notice to you, and thereafter, we may establish another Papa Ray's Pizza Restaurant in the former Protected Area or (iii) terminate this Agreement upon delivery of written notice to you.
3. RENEWAL OF FRANCHISE
- 3.1 Franchisee's Right to Renew.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, franchisees are generally prohibited from engaging in wholesale activities. The franchise agreement specifies that franchisees must focus on retail sales and are not allowed to sell or distribute products to third parties for resale. This restriction includes sales through alternative distribution channels such as supermarkets, mail order systems, or the internet.
However, the Aw franchise agreement does allow for exceptions regarding delivery and catering services outside of a franchisee's protected area, but only with prior written consent from Aw. If consent is granted, the franchisee must adhere to the standards and procedures outlined in the operations manual. This permission is contingent upon the area not being within another franchisee's protected territory or an affiliate-owned Aw location. If the area is later assigned to another franchisee, the delivery and catering services must cease immediately.
Additionally, franchisees are prohibited from conducting targeted marketing within another franchisee's protected area. Targeted marketing includes advertising and promotional activities directed at specific addresses, such as direct mailings and telephone solicitations. This restriction aims to prevent confusion and competition among Aw franchisees soliciting the same customers. These restrictions are designed to maintain the integrity of the Aw brand and ensure fair competition among franchisees.