What happens if an Aw franchisee commits a default under the lease for the premises?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
nsent to the termination or expiration of this Agreement, or any other relief which we may seek in a complaint to lift the provisions of any automatic stay under any bankruptcy rules. In addition, you (and your Owners) agree not to seek any injunctive relief from any court in any jurisdiction which would have the effect of staying or enjoining this provision.
- 15.2 By the Company With Opportunity to Cure. We have the right to terminate this Agreement upon written notice to you if you (or any of your Owners):
- (a) fail to accurately report the Gross Revenue of your Papa Ray's Pizza Restaurant or to timely pay royalty fees, marketing fund contributions, or other payments due to us or our affiliates, and do not correct such failure within ten (10) days after written notice of such failure is delivered to you;
- (b) commit any act or omission of default under the lease for the Premises and do not cure the default within the applicable cure period set forth in the lease;
- (c) fails to meet the minimum Gross Revenue requirement described in Section 2.7 above following notice and a twelve (12) month period in which to increase the Gross Revenue in order to meet the required minimum Gross Revenue requirement; or
- (d) fail to comply with any other provision of this Agreement or any mandatory specification, standard or operating procedure we prescribe from time to time, and do not correct such failure within thirty (30) days after written notice of such failure to comply is delivered to you. If such breach cannot be reasonably be cured within such thirty (30) day period and if you commence a bona fide program to cure such breach within thirty (30) days and continue to take such actions as are necessary to complete such cure until completed, you will be given the reasonable amount of time required to complete the cure. If you fail to continue to take the necessary action to cure or you do not complete the cure within the reasonable period, then we may terminate this Agreement effective
upon delivery to you of written notice that such breach has not been cured in a reasonable time and we are electing to terminate.
15.3 Right to Operate Upon Default. In addition to our right to terminate this Agreement and not in lieu of such right or any other rights, in the event that you have not cured a default under this Agreement within fourteen (14) days after receipt of a written notice of default, we may, at our option, enter upon the Premises and exercise complete authority with respect to the operation of your Papa Ray's Pizza Restaurant until such time as we determine that the default has been cured and that there is compliance with the requirements of this Agreement. You acknowledge and agree that our agent or other representative designated by us may take over, control and operate your Papa Ray's Pizza Restaurant, that you shall pay us the then-current published fee for such management service, plus all travel expenses, room and board and other expenses reasonably incurred by such agent or representative so long as it shall be required to enforce compliance with this Agreement. You further acknowledge that if we temporarily operate your Papa Ray's Pizza Restaurant for you under this Paragraph 15.4, you will indemnify and hold harmless us and our agent or representative respecting any and all claims arising out of our operation of your Papa Ray's Pizza Restaurant under this Paragraph 15.4. Nothing herein shall require us to operate your Papa Ray's Pizza Restaurant when you are in default.
16. RIGHTS OF THE COMPANY AND OBLIGATIONS OF FRANCHISEE UPON TERMINATION OR EXPIRATION OF THE FRANCHISE.
- 16.1 Payment of Amounts Owed to the Company. You agree to pay to us within ten (10) days after the effective date of termination or expiration (without renewal) of this Agreement such royalty fees, marketing fund contributions, service charges due us on any of the foregoing and all other amounts owed to us and our affiliates which are then unpaid. You must furnish a complete accounting of all such amounts owed to us and our affiliates with the payment.
- 16.2 The Marks. You (and your Owners) agree that after the termination or expiration (without renewal) of this Agreement you will:
- (a) not directly or indirectly at any time or in any manner identify yourself or any business as a current or former Papa Ray's Pizza Restaurant, or as a franchisee or licensee of or as otherwise associated with us, or use the Marks, any colorable imitation thereof or other indicia of a Papa Ray's Pizza Restaurant in any manner or for any purpose, or utilize for any purpose any trade name, trademark, service mark, trade dress, domain name, or other commercial symbol that suggests or indicates a connection or association with us;
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, if a franchisee commits an act or omission of default under the lease for the premises, Aw has the right to terminate the Franchise Agreement. However, the franchisee has an opportunity to cure the default within the applicable cure period set forth in the lease. If the franchisee fails to cure the default within this period, Aw can terminate the agreement with written notice.
In addition to Aw's right to terminate the agreement, Aw has the option to enter the premises and take control of the Papa Ray's Pizza Restaurant's operations if the franchisee fails to cure a default within fourteen days after receiving written notice. This control will continue until Aw determines that the default has been resolved and the franchisee is compliant with the Franchise Agreement. The franchisee is responsible for paying Aw the current published fee for such management service, along with all travel, room, board, and other expenses incurred by Aw's agent or representative during this period.
The franchisee is obligated to indemnify and hold Aw harmless from any claims arising from Aw's operation of the Papa Ray's Pizza Restaurant during the default period. However, Aw is not required to operate the restaurant during the default. This provision allows Aw to protect its brand and ensure the restaurant's continued operation while addressing the franchisee's default.
Aw also requires that any lease or sublease of the premises be approved by them before execution by the franchisee. Aw may require specific terms and provisions to be included in the lease, such as a term at least equal to the Franchise Agreement, collateral assignment to Aw, notification of default, permission for Aw's signs, restrictions on the premises' use, and the ability for Aw to enter the premises and remove signs upon termination or expiration of the Franchise Agreement.