Does the Aw franchise agreement require the franchisee to pay amounts owed to affiliates of the company after termination or expiration?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.1 Payment of Amounts Owed to the Company. You agree to pay to us within ten (10) days after the effective date of termination or expiration (without renewal) of this Agreement such royalty fees, marketing fund contributions, service charges due us on any of the foregoing and all other amounts owed to us and our affiliates which are then unpaid. You must furnish a complete accounting of all such amounts owed to us and our affiliates with the payment.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the franchise agreement stipulates that upon termination or expiration of the agreement, the franchisee is obligated to pay all outstanding amounts to both Aw and its affiliates. Specifically, within ten days of termination or expiration, the franchisee must remit all unpaid royalty fees, marketing fund contributions, service charges, and any other amounts owed to Aw and its affiliates. This payment must be accompanied by a comprehensive accounting of all such outstanding debts.
This requirement means that franchisees must maintain meticulous records of all financial transactions with Aw and its affiliates to ensure accurate payment upon termination or expiration. Failure to comply with this provision could result in legal action by Aw to recover the outstanding amounts. The franchisee bears the responsibility of providing a complete accounting, which underscores the importance of maintaining accurate and up-to-date financial records throughout the franchise term.
This clause is fairly standard in franchise agreements, as it protects the franchisor and its affiliates from potential financial losses resulting from unpaid debts at the end of the franchise relationship. Prospective Aw franchisees should be aware of this obligation and factor it into their financial planning, ensuring they have a system in place to track and manage all payments to Aw and its affiliates to avoid any disputes upon termination or expiration of the franchise agreement.