What happens if an Aw franchisee transfers the franchise without Aw's written approval?

According to Aw's 2025 Franchise Disclosure Document, transferring the franchise without prior written approval from Aw constitutes a breach of the franchise agreement. Such an unapproved transfer conveys no rights or interests in the franchise, the franchisee entity, the Papa Ray's Pizza Restaurant, or its assets to the new party. This means the purported transfer is legally invalid, and the franchisee remains bound by the original agreement.

This requirement protects Aw by ensuring that any new franchisee meets their standards for business acumen, financial stability, and moral character. Aw needs to approve any transfer to maintain the consistency and quality of the brand. Without this control, a franchisee could transfer the business to someone who does not adhere to Aw's standards, potentially harming the brand's reputation and the overall franchise system.

The FDD outlines specific conditions for approval of an assignment, including that the franchisee and owners are in compliance with the agreement, the proposed assignee is of good moral character and has sufficient business experience and financial resources, and the assignee completes the initial training program. Additionally, all outstanding payments to Aw must be settled, and the assignee must assume all obligations under the agreement. A transfer fee of $9,000 is required, though it is reduced to $5,000 if the assignee is an existing franchisee approved for an additional franchise.

In essence, Aw retains significant control over who can operate a Papa Ray's Pizza Restaurant under its brand. Franchisees need to be aware that any transfer without Aw's explicit consent is not only a violation of the agreement but also legally ineffective, potentially leading to termination of the franchise agreement.