What is the geographic scope of the Aw covenant not to compete, measured from other franchise locations?
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) mile
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 having an interest in a restaurant business selling similar products or services to Aw's Papa Ray's Pizza concept. This restriction applies for two years after the franchise agreement's assignment, termination, or expiration. The geographic scope extends to within ten miles of the premises of any other Papa Ray's Pizza Restaurant.
This means that after leaving the Aw system, a former franchisee cannot open or be involved with a competing pizza restaurant within a 10-mile radius of their former Aw location or any other Aw franchise. This restriction aims to protect Aw's market share and prevent former franchisees from using their knowledge of the Aw system to directly compete against it.
It is important to note that these non-compete restrictions may be subject to modification by a court to ensure they are valid and enforceable. Franchisees should be aware of these limitations and consider them carefully before investing in an Aw franchise, as they could impact their future business opportunities after the franchise term ends. The franchisee also agrees to pay all costs and expenses (including reasonable attorneys' and experts' fees) incurred by Aw in connection with the enforcement of those covenants not to compete.