Is an Aw franchisee allowed to operate other Papa Ray's Pizza Restaurants under franchise agreements with the franchisor during the non-compete period?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.1 Covenant Not To Compete. Upon assignment, termination or expiration (without renewal) of this Agreement, you (and your Owners) agree that for a period of two (2) years, commencing on the effective date of assignment, termination or expiration, or the date on which you begin complying with the covenants herein, whichever is later, you (and your Owners) will not:
- (a) have any direct or indirect interest as an owner, investor, partner, director, officer, employee, consultant, representative or agent, or in any other capacity, in (a) any restaurant business selling products or services substantially similar to a Papa Ray's Pizza Restaurant concept then being offered by us (except other Papa Ray's Pizza Restaurants you are operating pursuant to franchise agreements with us), which is located (i) within ten (10) miles of the Premises of your Papa Ray's Pizza Restaurant or (i) within ten (10) miles of the premises of any other Papa Ray's Pizza Restaurant,
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to the 2025 Aw Franchise Disclosure Document, a franchisee is permitted to operate other Papa Ray's Pizza Restaurants under franchise agreements with Aw during the post-term non-compete period. Specifically, the post-term covenant not to compete states that the franchisee will not have any interest in any restaurant business selling products or services substantially similar to a Papa Ray's Pizza Restaurant concept, except other Papa Ray's Pizza Restaurants they are operating pursuant to franchise agreements with Aw.
This clause provides an exception to the non-compete restrictions, allowing franchisees to continue operating existing Papa Ray's Pizza Restaurants even after the termination or expiration of their initial franchise agreement. This is a significant benefit for franchisees who may have multiple locations or wish to continue their relationship with the Aw brand.
However, this exception only applies to Papa Ray's Pizza Restaurants operated under franchise agreements with Aw. It does not allow franchisees to operate competing restaurant concepts. Furthermore, the restaurants must be within specific geographic limitations. The restaurants must not be located within ten miles of the premises of the franchisee's former Papa Ray's Pizza Restaurant or within ten miles of any other Papa Ray's Pizza Restaurant.