If Aw cures a default under the lease, what right does Aw have?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
At our option, we may require that the lease: (i) have a term, with initial and renewal terms, at least equal to the initial term of this Agreement; (ii) be collaterally assigned to us (with the consent of the lessor, if required), by execution of the Collateral Assignment of Lease attached hereto as Exhibit 3 (the assignment may be exercised only upon your default under the lease or this Agreement or the expiration or termination of this Agreement); (iii) provides that the lessor shall give written notice to us (concurrently with you) of any default by you under the lease, and will give us an additional fifteen (15) days to cure any default not cured by you during the cure period and assign the lease to us if defaults are cured by us; (iv) permits the use on the Premises of all signs required by the us for Papa Ray's Pizza Restaurants, subject to applicable local laws, codes and ordinances; (v) provides that on expiration or termination of your Franchise Agreement, we may enter the leased
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw may require that the lease provides that the lessor give written notice to Aw (concurrently with the franchisee) of any default by the franchisee under the lease. The lease will give Aw an additional 15 days to cure any default not cured by the franchisee during the cure period and assign the lease to Aw if defaults are cured by Aw.
This means that Aw has the option to step in and resolve any lease defaults made by the franchisee. By curing the default, Aw can ensure the franchise location remains operational, protecting its brand and revenue stream. This clause is typically included in franchise agreements to give the franchisor more control over the location and to mitigate risks associated with franchisee lease defaults.
For a prospective Aw franchisee, this clause offers some security. If you, as the franchisee, are unable to cure a lease default, Aw has the right to step in and resolve the issue, potentially preventing eviction and business closure. However, it's important to note that Aw is not obligated to cure the default, and the specific terms of the lease assignment would need to be carefully reviewed to understand the full implications.