If Aw incurs costs to purchase insurance on behalf of an Aw franchisee, when is reimbursement due?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE1,3 | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| omissions, our enforcement of this Agreement, our defense of our actions taken under this Agreement or your breach of the Franchise Agreement. | |||
| Costs and Attorney's Fees | Will vary under circumstances | As incurred | You must reimburse us for costs and attorney's fees we incur in actions against you to enforce the Franchise Agreement. |
| Reimbursement for insurance costs | Costs and premiums incurred by us on your behalf. | Upon demand | Payable if we incur costs to purchase insurance for you if you fail to do so. |
| Reimbursement of Taxes | Actual assessed taxes against us for your operation of your business or on any payments you make to us. | Upon demand | Only payable if taxes of this type are assessed against us. |
| Software license fees | Undetermined since proprietary software has not yet been developed. | As arranged | Payable if we develop proprietary software that you must use for operating your Papa Ray’s Pizza Restaurant. |
Source: Item 6 — OTHER FEES (FDD pages 13–16)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, if Aw incurs costs and premiums to purchase insurance on behalf of a franchisee, reimbursement is due upon demand. This situation arises if the franchisee fails to obtain the required insurance coverage themselves, prompting Aw to secure it on their behalf.
This policy ensures that the Aw franchise location remains compliant with insurance requirements, protecting both the franchisee and Aw from potential liabilities. By requiring reimbursement upon demand, Aw maintains control over ensuring continuous coverage and minimizing financial risk.
For a prospective Aw franchisee, this means it is crucial to maintain the required insurance coverage to avoid Aw stepping in to purchase insurance on their behalf. Failure to do so will result in immediate demand for reimbursement of the costs and premiums incurred by Aw. This could place an unexpected financial burden on the franchisee if not properly managed.
It is common practice in franchising for franchisors to have such stipulations to protect their brand and ensure all locations meet minimum operational and legal standards. Franchisees should clarify with Aw the specific insurance requirements and preferred providers to ensure compliance and avoid potential issues.