Does the Aw Franchise Agreement mention any conditions under which the protected area might be reduced or eliminated?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
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 de
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the franchise agreement outlines specific conditions under which the protected area granted to a franchisee may be reduced or eliminated. If a franchisee fails to achieve a minimum annual gross revenue of $300,000 beginning in their second year of operation, they will be given a 12-month period to improve. If they still fail to meet this minimum revenue target after the 12-month period, Aw has the option to reduce or eliminate the franchisee's protected area.
This provision means that a franchisee's exclusive territory is not guaranteed indefinitely. Aw retains the right to adjust the protected area if the franchisee's performance does not meet the specified revenue threshold. If the protected area is reduced or eliminated, Aw is then permitted to establish another Papa Ray's Pizza Restaurant in the former protected area.
This condition creates a performance-based risk for Aw franchisees. Franchisees need to be aware that their ability to maintain their protected area is directly tied to their restaurant's financial performance. It also incentivizes franchisees to actively manage and promote their business to meet the minimum revenue requirements and safeguard their exclusive territory.