Is the franchisee of Aw required to operate exclusively within the specified protected area?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
(All references to the "term" of this Agreement refer to the period from the Agreement Date, to the date on which this Agreement actually terminates or expires.)
- 2.2 Full Term Performance. You specifically agree to be obligated to operate the Papa Ray's Pizza Restaurant, perform the obligations of this Agreement, and continuously exert your best efforts to promote and enhance the Papa Ray's Pizza Restaurant and to affect the widest and best possible distribution of products and services from your Papa Ray's Pizza Restaurant within the Protected Territory, for the full term of this Agreement.
- 2.3 Protected Area. As long as this Agreement is in force and effect and you are not in default under any of the terms of this Agreement, we will not establish another Papa Ray's Pizza Restaurant franchise or operate itself or through an affiliate any other Papa Ray's Pizza Restaurant within the protected area described in Exhibit 1 ("Protected Area"). The Protected Area granted to you will be a certain mile radius from the Premises identified in Exhibit 1. The minimum radius that you will be granted is three (3) miles from the Premises. The criteria for determining the boundaries of the Protected Area include the population density, demographics, the amount of existing competition in the market, major and/or restricting topographical features which clearly define contiguous areas, and/or other factors we deem relevant to the operation of a Papa Ray's Pizza Restaurant. As a result of these considerations, the size of Protected Areas granted to franchisees may vary. Notwithstanding the foregoing, in the event the location of the Premises is within a limited use facility, your Protected Area shall be limited to the limited use facility (as defined below) in which your Papa Ray's Pizza Restaurant is located.
- 2.4 Our Reservation of Rights. We have the right to grant outside of the Protected Area such other Papa Ray's Pizza Restaurant businesses and franchises as we, in our sole and exclusive discretion, deem appropriate. We and any affiliates reserve the right, both within and outside of the Protected Area to:
- (a) grant a Papa Ray's Pizza Restaurant franchise or operate ourselves or through an affiliate a Papa Ray's Pizza Restaurant located within a limited use facility.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, franchisees are expected to exert their best efforts to promote and enhance their Papa Ray's Pizza Restaurant and to affect the widest and best possible distribution of products and services from their restaurant within their protected territory for the full term of the agreement. As long as the Franchise Agreement is in effect and the franchisee is not in default, Aw will not establish another Papa Ray's Pizza Restaurant franchise or operate another restaurant within the franchisee's protected area.
However, the FDD also states that franchisees are prohibited from providing delivery service to or catering services at any location outside their Protected Area unless they obtain prior written consent from Aw. If consent is granted, delivery and catering services outside the Protected Area are allowed only if the area does not fall within another franchisee's Protected Area. If the area is later assigned to another franchisee, all deliveries and catering services to customers in that area must cease immediately.
Furthermore, franchisees are strictly prohibited from conducting targeted marketing to promote their Papa Ray's Pizza Restaurant within the Protected Area of another Papa Ray's Pizza franchisee. Targeted marketing includes advertising and promotion restricted to an address, such as direct mailings, door leaflets, telephone solicitation, and localized signs. This restriction aims to prevent confusion in the marketplace among Papa Ray's Pizza franchisees soliciting the same customers.