If I fail to pay amounts due to other persons, can Aw terminate my franchise agreement?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- (i) fail on three (3) or more separate occasions within any twelve (12) consecutive month period to submit when due financial statements, reports or other data, information or supporting records, to pay when due the royalty fees, marketing fund contributions, other payments due to us or to pay amounts due to other persons, or otherwise fail to comply with this Agreement, or with any mandatory specification, standard or operating procedures we prescribe from time to time, whether or not such failures to comply are corrected after notice of those failures to comply is delivered to you;
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, failure to pay amounts due to other persons can lead to the termination of the franchise agreement under specific conditions. Specifically, Aw can terminate the franchise agreement if the franchisee fails on three or more separate occasions within any twelve consecutive month period to pay amounts due to other persons.
This clause is significant for prospective franchisees as it highlights the importance of maintaining timely payments to all creditors, not just Aw. Consistent failure to meet financial obligations, even if those obligations are to third parties, can be grounds for termination, regardless of whether the failures are corrected after notice. This could include suppliers, landlords, or other service providers necessary for the operation of the Aw franchise.
It is important to note that the termination can occur even if the franchisee eventually rectifies the payment failures after receiving notice. The agreement emphasizes consistent compliance, and repeated failures, even if corrected, can still trigger termination. Franchisees should ensure they have robust financial management systems in place to avoid repeated instances of late or non-payment to any party to prevent potential termination of their Aw franchise agreement.