After the Aw franchise is terminated or expires, for how long does the non-competition covenant apply?
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 non-competition covenant applies for a period of 2 years. During this time, the franchisee is prohibited from involvement in a competing business within 20 miles of their former Aw location or any other Aw restaurant. These restrictions also apply after an assignment of the franchise.
This non-compete agreement is fairly standard in the franchise industry. The purpose is to protect Aw's market and brand from former franchisees using their knowledge and experience gained while operating an Aw franchise to unfairly compete. The 20-mile radius is designed to prevent direct competition within the brand's established territory.
Prospective franchisees should carefully consider the implications of this non-compete clause. It could limit their future business opportunities if they decide to leave the Aw system. It is important to fully understand the scope and enforceability of the non-compete agreement before signing the franchise agreement. Franchisees should seek legal counsel to understand their rights and obligations under the agreement.