Is the franchisee required to comply with covenants in Section 17 of the Aw Franchise Agreement upon termination or expiration?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- 16.8 Covenants. Upon termination or expiration of this Agreement, you shall comply with the covenants contained in Section 17 of this Agreement.
17. POST-TERM COVENANT NOT TO COMPETE.
- 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, franchisees must comply with the covenants in Section 17 of the Franchise Agreement upon termination or expiration of the agreement. Section 17 outlines the post-term covenant not to compete.
Specifically, Section 17.1 details the covenant not to compete, stating that upon assignment, termination, or expiration of the Franchise Agreement, the franchisee (and their Owners) agree to refrain from certain competitive activities for a period of two years. This two-year period begins on the effective date of assignment, termination, or expiration, or the date on which the franchisee begins complying with the covenants, whichever is later.
The restrictions include not having any direct or indirect interest in any restaurant business selling products or services substantially similar to the Aw concept. This restriction applies to businesses located within ten miles of the franchisee's former Aw location or within ten miles of any other Aw restaurant. This non-compete clause is a standard practice in franchising to protect the brand and market share of the franchisor.