What is the geographic scope of the Aw covenant not to compete, measured from the former franchise location?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
of this Section 16.
- 16.10 Continuing Obligations. All obligations of the Company and you which expressly or by their nature survive the expiration or termination of this Agreement will continue in full force and effect subsequent to and notwithstanding its expiration or termination and until they are satisfied or by their nature expire.
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,
- or (b) any entity which is granting franchises or licenses or entering into joint venture relationships for any re
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the post-term covenant not to compete restricts a franchisee from engaging in similar business activities within a specific geographic area. Specifically, for a period of two years after the termination, expiration, or assignment of the franchise agreement, the franchisee (and their owners) cannot have any direct or indirect interest in a restaurant business selling similar products or services to Aw.
The restricted area is defined as within ten miles of the former Papa Ray's Pizza Restaurant location or within ten miles of any other Papa Ray's Pizza Restaurant. This restriction applies to roles such as owner, investor, partner, director, officer, employee, consultant, representative, or agent.
This non-compete clause aims to protect Aw's market and brand by preventing former franchisees from using their knowledge of the Aw system to directly compete in the same area. However, the agreement also states that a court may modify these restrictions to ensure they are valid and enforceable, acknowledging that public policies vary by jurisdiction. This means the specific enforcement of the non-compete agreement can depend on local laws and judicial interpretation.