After the Aw franchise is terminated or expires, what is the geographic limit of the non-competition covenant?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN FRANCHISE AGREEMENT | SUMMARY |
|---|---|---|
| n. Franchisor’s right of first refusal | Section 14.6 | We can match any offer for your business or an |
| to acquire franchisee’s business | ownership interest in you. | |
| o. Franchisor’s option to purchase franchisee’s business | Section 16.7 | We may within 30 days of termination or expiration purchase certain assets of your Papa Ray’s Pizza Restaurant at lesser of cost or fair market value. |
| p. Death or disability of franchisee | Section 14.4 | Franchise or ownership interest in you must be assigned to approved buyer within 6 months. |
| q. Non-competition covenants | Section 9.3 | No involvement in competing business |
| during the term of the franchise | anywhere. | |
| r. Non-competition covenants after the franchise is terminated or expires | Section 17.1 | No involvement in a competing business for 2 years within 20 miles of your Papa Ray’s Pizza Restaurant or of any other Papa Ray’s Pizza Restaurant (same restrictions apply after assignment). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 34–36)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, if the franchise is terminated or expires, the franchisee is subject to a non-competition covenant. This means the franchisee cannot be involved in a competing business for a period of 2 years. This restriction applies within a 20-mile radius of the franchisee's former Papa Ray’s Pizza Restaurant location, as well as within 20 miles of any other Papa Ray’s Pizza Restaurant.
This post-term non-compete agreement is fairly standard in the franchise industry. The purpose is to protect Aw's market and prevent former franchisees from using the brand's confidential information and business model to compete against the system. The 20-mile radius is a defined geographic area where Aw has a vested interest in protecting its brand and customer base.
It is important to note that these restrictions also apply after an assignment of the franchise. This means that if a franchisee sells their Aw franchise, the non-compete obligations continue to apply to the original franchisee under the same terms. Prospective franchisees should carefully consider the implications of this non-compete clause, especially if they plan to operate another similar business in the future or sell their franchise and remain in the same geographic area.