What is the Aw franchisee's responsibility regarding financing for the restaurant?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
us (once we have determined the true and correct amount of Gross Revenue), we will transfer from your account the balance of the royalty and Marketing Fund contribution due or we will credit the excess against the next transfer for royalty and Marketing Fund contribution due, as applicable.
- 10.6 Interest on Late Payments. To encourage prompt payment of all amounts due to us and to cover the costs and expenses involved in handling and processing late payments, you will pay a late payment charge equal to the greater of (i) One Hundred Fifty Dollars ($150.00) or (ii) one and one-half percent (1 ½%) per month on all payments due to us during the period of time said payments are due and unpaid, but no more than the highest interest rate permitted by law. (You acknowledge that the inclusion of this Paragraph in this Agreement does not mean we agree to accept or condone late payments, nor does it indicate that we have any intention to extend credit to, or otherwise finance your operation of the Papa Ray's Pizza Restaurant.) We shall have the right to transfer from your bank account designated for making payments to us in the amount of any interest due and owing under this Paragraph. In addition, you will pay us any and all service charges we incur for each rejected electronic transfer or if you submit to us a check that is not honored and/or returned for insufficient funds.
- 10.7 Application of Payments. When we receive a payment from you, we have the right in our sole discretion to apply it as we see fit to any past due indebtedness of yours due to us or our affiliates, whether for royalties, Marketing Fund contributions, purchases, interest, or for any other reason, regardless of how you may designate a particular payment to be applied.
11. OPERATING STANDARDS
11.1 Importance of Uniformity.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, franchisees are responsible for financing their Papa Ray's Pizza Restaurant. The agreement states that Aw does not intend to extend credit or finance the franchisee's operation. This means franchisees must secure their own funding through personal savings, loans, or other financing methods. Aw may offer payment options, but franchisees are responsible for any late payment fees, which are the greater of $150 or 1.5% per month on overdue amounts.
Furthermore, franchisees are responsible for leasing a suitable site for their Papa Ray's Pizza Restaurant. While Aw may provide site selection assistance, the franchisee ultimately bears the responsibility for securing an appropriate location. This includes all associated costs such as lease payments, security deposits, and any necessary build-out or renovation expenses. The franchisee must obtain Aw's approval of the site before entering into a lease agreement.
In addition to securing financing for the initial setup, Aw franchisees are also responsible for ongoing expenses such as royalty fees, marketing fund contributions, insurance, and employee wages. They must maintain adequate insurance coverage, including liability and casualty insurance, with minimum coverage of $1,000,000 per occurrence and $2,000,000 in the aggregate. Franchisees must also ensure they have sufficient staff to operate the restaurant according to Aw's standards.
Overall, the financial burden of establishing and operating a Papa Ray's Pizza Restaurant falls on the franchisee. Prospective franchisees should carefully consider their financial resources and ability to secure funding before entering into a franchise agreement with Aw.