Can an Aw franchisee transfer their Papa Ray's Pizza Restaurant by issuing additional securities representing an ownership interest in the franchisee without Aw's prior written approval?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
and/or measuring customer satisfaction in Papa Ray's Pizza Restaurants.
14. OWNERSHIP; ASSIGNMENT
- 14.1 Assignment by the Company. This Agreement and the Franchise are fully assignable by us and will inure to the benefit of any assignee or other legal successor to the interest of the Company herein.
- 14.2 By Franchisee With Approval. You understand and acknowledge that the rights and duties created by this Agreement are personal to you and we have granted the franchise in reliance upon the individual or collective character, skill, aptitude, attitude, business ability and financial capacity of you (and your Owners). Therefore, except as otherwise provided in Paragraph 14.5 below, neither the franchise, your Papa Ray's Pizza Restaurant or a substantial portion of the assets of your Papa Ray's Pizza Restaurant (or any interest therein) nor any part or all of the ownership of an entity that is the Franchisee may be voluntarily, involuntarily, directly or indirectly, assigned, sold, subdivided, subfranchised or otherwise transferred by you or your Owners (including, without limitation, by merger or consolidation, by issuance of additional securities representing an ownership interest in the Franchisee, or in the event of the death of the Franchisee or an Owner of the Franchisee, by will, declaration of or transfer in trust or the laws of intestate succession) without our prior written
approval. Further, neither your Papa Ray's Pizza Restaurant nor a substantial portion of its assets may be transferred without a concurrent transfer of this Agreement and the franchise rights granted hereunder to the same transferee.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, franchisees cannot transfer ownership in their Papa Ray's Pizza Restaurant, including by issuing additional securities that represent an ownership interest, without prior written approval from Aw. This requirement is in place because Aw grants the franchise based on the individual or collective character, skills, aptitude, business ability, and financial capacity of the franchisee and their owners.
This restriction applies to any voluntary or involuntary transfer, whether direct or indirect. This includes transfers through merger, consolidation, or the issuance of additional securities. It also applies in the event of the death of the franchisee or an owner, where the transfer would occur through a will, declaration of trust, or intestate succession.
Any transfer or assignment made without Aw's prior written approval constitutes a breach of the Franchise Agreement and conveys no rights or interests in the franchise, the franchisee entity, the Papa Ray's Pizza Restaurant, or its assets. This provision ensures that Aw maintains control over who operates and owns its franchises, safeguarding the brand's reputation and standards.
Prospective franchisees should be aware that this clause significantly limits their ability to sell or transfer their business without Aw's consent. Franchisees need to factor in the potential difficulties and requirements associated with seeking approval for any future transfer of ownership when considering this franchise opportunity.