Does Aw grant franchises in reliance upon the aptitude of the franchisee?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
ssessing compliance with the System, 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. Any such assignment or transfer without our prior written approval will constitute a breach of this Agreement and will convey no rights to or interests in the franchise, the franchisee entity, your Papa Ray's Pizza Restaurant or its assets.
- 14.3 Conditions for Approval of Assignment. If you (and your Owners) are in compliance with this Agreement, we will not unreasonably withhold our approval of an assignment, provided that the proposed assignee is, in our opinion, of good moral character and has sufficient business experience, aptitude and financial resources to own and operate a Pap Ray's Restaurant, does not have any conflicting interests unacceptable to us, and otherwise meets our then applicable standards for franchisees. In addition the following conditions must be met prior to, or concurrently with, the effective date of the assignment:
- (a) all obligations of you and your Owners incurred in connection with this Agreement have been assumed by the assignee and, as applicable, its owners;
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw does grant franchises in reliance upon the aptitude of the franchisee. Specifically, the agreement states that Aw grants franchises based on the individual or collective character, skill, aptitude, attitude, business ability, and financial capacity of the franchisee and their owners. This indicates that Aw places significant importance on these qualities when awarding a franchise.
This reliance on the franchisee's attributes has implications for the transfer of the franchise. The FDD states that the franchisee cannot assign or transfer the franchise without Aw's prior written approval because the original grant was based on the franchisee's specific characteristics. This requirement allows Aw to maintain control over who operates an Aw franchise and ensures that any new franchisee meets their standards.
If a franchisee wishes to assign their franchise, Aw will assess the proposed assignee's moral character, business experience, aptitude, and financial resources. The assignee must also meet Aw's then-current standards for franchisees and not have any conflicting interests. Furthermore, the assignee may be required to complete the initial training program. This ensures that any new franchisee possesses the necessary skills and qualities to successfully operate an Aw franchise.
In addition to meeting the above requirements, the assignee must also meet certain financial obligations. The assignee must assume all obligations of the original franchisee, pay any outstanding fees, and pay a transfer fee to Aw. The transfer fee is Nine Thousand Dollars ($9,000.00), but it is reduced to Five Thousand Dollars ($5,000.00) if the assignee is an existing franchisee approved for an additional franchise.