factual

Does the Aw Franchise Agreement define a protected area for the franchisee?

Aw Franchise · 2025 FDD

Answer from 2025 FDD Document

e widest and best possible distribution of products and services from your Papa Ray's Pizza Restaurant within the Protected Territory, for the full term of this Agreement.

  • 2.3 Protected Area. As long as this Agreement is in force and effect and you are not in default under any of the terms of this Agreement, we will not establish another Papa Ray's Pizza Restaurant franchise or operate itself or through an affiliate any other Papa Ray's Pizza Restaurant within the protected area described in Exhibit 1 ("Protected Area"). The Protected Area granted to you will be a certain mile radius from the Premises identified in Exhibit 1. The minimum radius that you will be granted is three (3) miles from the Premises. The criteria for determining the boundaries of the Protected Area include the population density, demographics, the amount of existing competition in the market, major and/or restricting topographical features which clearly define contiguous areas, and/or other factors we deem relevant to the operation of a Papa Ray's Pizza Restaurant. As a result of these considerations, the size of Protected Areas granted to franchisees may vary. Notwithstanding the foregoing, in the event the location of the Premises is within a limited use facility, your Protected Area shall be limited to the limited use facility (as defined below) in which your Papa Ray's Pizza Restaurant is located.
  • 2.4 Our Reservation of Rights. We have the right to grant outside of the Protected Area such other Papa Ray's Pizza Restaurant businesses and franchises as we, in our sole and exclusive discretion, deem appropriate. We and any affiliates reserve the right, both within and outside of the Protected Area to:
  • (a) grant a Papa Ray's Pizza Restaurant franchise or operate ourselves or through an affiliate a Papa Ray's Pizza Restaurant located within a limited use facility. A limited use facility includes those located within airports, railroad stations or other transportation facilities; stadiums, racetracks or other sport facilities; enclosed shopping centers; casinos; theaters, auditoriums, amusement parks or other entertainment facilities; military bases; and college campuses; and similar types of captive locations;
  • (b) distribute products and services which comprise, may in the future comprise or which do not comprise, a part of the System through any alternative distribution channels including,

but not limited to, supermarkets and other retail facilities, mail order systems, the Internet or similar electronic media, using the Marks ("Alternate Distribution Channels");

  • (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.
  • 2.5 Delivery, Catering and Marketing Restrictions. You are prohibited from providing delivery service to or catering services at any location outside your Protected Area unless you obtain our prior written consent to do so. If you obtain our consent to deliver or provide catering services outside of the Protected Area, and subject to standards, specifications and procedures for delivery and catering as set forth in the Operations Manual, you may deliver and provide catering services outside of the Protected Area only as long as the area does not fall within the Protected Area assigned to another Papa Ray's Pizza franchisee or affiliate-owned Papa Ray's Pizza Restaurant. If the area is later assigned to a Papa Ray's Pizza franchisee, you must immediately cease all deliveries and catering services to customers located in the other franchisee's Protected Area.

Throughout the term of the franchise, you are strictly prohibited from conducting targeted marketing to promote your Papa Ray's Pizza Restaurant within the Protected Area of another Papa Ray's Pizza franchisee. "Targeted Marketing" shall include all forms of advertising and promotion for customers which can reasonably be restricted to an address, including, but not limited to, direct mailings, door leaflets, telephone solicitation, 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.

Source: Item 22 — CONTRACTS (FDD pages 39–40)

What This Means (2025 FDD)

According to Aw's 2025 Franchise Disclosure Document, the Franchise Agreement does grant a protected area to franchisees. As long as the Franchise Agreement is in effect and the franchisee is not in default, Aw will not establish another Papa Ray's Pizza Restaurant franchise or operate a Papa Ray's Pizza Restaurant itself or through an affiliate within the protected area. This protected area is described in Exhibit 1 of the Franchise Agreement. The protected area will be a certain mile radius from the premises, with a minimum radius of three (3) miles.

The criteria for determining the boundaries of the protected area include population density, demographics, the amount of existing competition in the market, major topographical features, and other factors Aw deems relevant. Because of these considerations, the size of protected areas granted to franchisees may vary. However, if the premises is within a limited use facility such as an airport, stadium, or college campus, the protected area is limited to that facility.

Aw also retains certain rights within and outside the protected area. Aw can grant franchises or operate Papa Ray's Pizza Restaurants within limited use facilities, distribute products through alternative channels like supermarkets or the internet, establish other businesses with different branding, acquire companies with similar businesses, and engage in other business activities not expressly prohibited by the agreement. Franchisees are prohibited from providing delivery or catering services outside their protected area without Aw's prior written consent, and even with consent, they cannot deliver or cater to areas within another franchisee's protected area. Franchisees are also prohibited from conducting targeted marketing within another franchisee's protected area.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.