In the Aw franchise agreement, what information must be provided for each guarantor?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
r approval of an assignment, provided that the proposed assignee is, in our opinion, of good moral character and has sufficient business experience, aptitude and financial resources to own and operate a Pap Ray's Restaurant, does not have any conflicting interests unacceptable to us, and otherwise meets our then applicable standards for franchisees. In addition the following conditions must be met prior to, or concurrently with, the effective date of the assignment:
- (a) all obligations of you and your Owners incurred in connection with this Agreement have been assumed by the assignee and, as applicable, its owners;
- (b) you have paid such royalty fees, marketing fund contributions, amounts for purchases and any other amounts owed to us or our affiliates which are then due and unpaid;
- (c)
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
Based on the 2025 FDD, the Aw franchise agreement stipulates that if a franchisee seeks to assign their agreement to a new party, the assignee (and their owners, if the assignee is a business entity) must execute and agree to be bound by owner guarantees. The specific information required in these guarantees is not detailed in this section. Instead, the FDD states that the owner guarantees should be in the form that Aw then customarily uses for new franchisees. This implies that the information required for a guarantor is subject to change based on Aw's current standards.
For a prospective Aw franchisee, this means that if they later decide to sell their franchise, the person or entity buying the franchise will need to provide owner guarantees. The exact details of what information Aw requires in these guarantees will depend on Aw's practices at the time of the transfer. This could include financial statements, personal background information, and other details that Aw deems necessary to assess the suitability of the new owner.
Given the lack of specific information in the FDD about the guarantor's requirements, it is crucial for potential franchisees to discuss this point with Aw directly. They should ask for examples of the current owner guarantee forms and clarify what information is typically required of guarantors. Understanding these requirements upfront can help a franchisee better plan for the future sale or transfer of their Aw franchise.