If an Aw franchisee is in compliance with the Franchise Agreement, can Aw unreasonably withhold approval of an assignment?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
t a concurrent transfer of this Agreement and the franchise rights granted hereunder to the same transferee. Any such assignment or transfer without our prior written approval will constitute a breach of this Agreement and will convey no rights to or interests in the franchise, the franchisee entity, your Papa Ray's Pizza Restaurant or its assets.
- 14.3 Conditions for Approval of Assignment. If you (and your Owners) are in compliance with this Agreement, we will not unreasonably withhold our approval of an assignment, provided that the proposed assignee is, in our opinion, of good moral character and has sufficient business experience, aptitude and financial resources to own and operate a Pap Ray's Restaurant, does not have any conflicting interests unacceptable to us, and otherwise meets our then applicable standards for franchisees. In addition the following conditions must be met prior to, or concurrently with, the effective date of the assignment:
- (a) all obligations of you and your Owners incurred in connection with this Agreement have been assumed by the assignee and, as applicable, its owners;
- (b) you have paid such royalty fees, marketing fund contributions, amounts for purchases and any other amounts owed to us or our affiliates which are then due and unpaid;
- (c) the assignee completes the initial training program required of new franchisees to our satisfaction;
- (d) if required, the lessor of the Premises has consented to your assignment or sublease of the Premises to the proposed assignee;
- (e) the assignee (and, if an entity, its direct or indirect owners) have, at our option, executed and agreed to be bound by either: (a) the form of franchise agreement, owner guarantees and such other ancillary agreements as are then customarily used by us in the grant of franchises for a Papa Ray's Pizza Restaurant, which may provide for royalty fees, marketing fund contributions and other fees and terms and conditions that differ from those contained in this Agreement; or (b) an assignment and assumption agree
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, if a franchisee and their owners are in compliance with the Franchise Agreement, Aw will not unreasonably withhold approval of an assignment. However, this is contingent on several conditions related to the proposed assignee. The assignee must be of good moral character, possess sufficient business experience, aptitude, and financial resources to operate a Papa Ray's Restaurant, and not have any conflicting interests that Aw deems unacceptable. Additionally, the assignee must meet Aw's then-current standards for franchisees.
Beyond the assignee's qualifications, several other conditions must be met before or during the assignment. The assignee must assume all obligations of the franchisee and their owners, and the franchisee must have paid all outstanding royalty fees, marketing fund contributions, and other amounts owed to Aw or its affiliates. The assignee must also complete the initial training program to Aw's satisfaction. If required, the lessor of the premises must consent to the assignment or sublease. The assignee must execute Aw's current form of franchise agreement, owner guarantees, and other ancillary agreements, or an assignment and assumption agreement satisfactory to Aw.
Furthermore, a transfer fee is required, typically Nine Thousand Dollars ($9,000.00), but this fee is reduced to Five Thousand Dollars ($5,000.00) if the assignee is an existing franchisee approved for an additional franchise. The franchisor must also approve the material terms of the assignment and determine that the price and payment terms will not adversely affect the restaurant's future operations. The franchisee must agree that any installment payments from the assignee will be subordinate to the assignee's ongoing obligations to Aw, such as royalty fees and marketing fund contributions. Finally, Aw may require capital expenditures to upgrade or remodel the premises to reflect the current brand image.