What happens upon a default by the Assignor under the Aw Franchise Agreement?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
The 2025 Aw Franchise Disclosure Document outlines the rights and obligations related to the assignment of franchise agreements. Specifically, if a franchisee (the assignor) defaults on the franchise agreement, Aw has certain rights. Upon the assignor's default, Aw can take control of the Papa Ray's Pizza restaurant operations if the default is not cured within fourteen days after written notice. This allows Aw to ensure compliance with the franchise agreement.
Aw has the option to manage the restaurant until the default is resolved. The franchisee is responsible for covering the costs associated with this management, including the then-current published fee for the management service, travel expenses, room and board, and other reasonable expenses incurred by Aw's agent or representative. This arrangement ensures that Aw can maintain the standards of the franchise while addressing the franchisee's default.
The franchisee also agrees to indemnify Aw and its representatives against any claims arising from Aw's operation of the Papa Ray's Pizza restaurant during the period of default. However, Aw is not obligated to operate the restaurant during the default period. In addition, upon termination or expiration of the franchise agreement, the franchisee must pay all outstanding amounts to Aw within ten days and discontinue using Aw's trademarks and other identifying marks.