Is the Initial Franchise Fee for an Aw franchise fully earned upon signing the agreement?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
bited by this paragraph). Further, during the term of this Agreement, you will not (1) divert customers or business from your Papa Ray's Pizza Restaurant to any other business or (2) hire any employees of ours, our affiliates or any other franchisees.
10. FEES AND ROYALTIES
10.1 Initial Franchise Fee. You must pay us an initial franchise fee (the "Initial Franchise Fee") of Thirty Thousand Dollars ($30,000.00). Upon signing this Agreement, you must pay us Fifteen Thousand Dollars ($15,000.00) of the Initial Franchise Fee in cash. The balance of Fifteen Thousand Dollars ($15,000.00) is due within five (5) days of our issuance of written approval of the site for your Papa Ray's Pizza Restaurant.
If you are (i) an existing franchisee in good standing under your existing franchise agreements with us purchasing an additional franchise; (ii) a honorably discharged Veteran; or (iii) a current or past employee of ours, our affiliate or one of our franchisees who was so employed
for a minimum of one year, you must pay us an Initial Franchise Fee of Fifteen Thousand Dollars ($15,000.00) in cash in full upon the signing of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the initial franchise fee is generally considered fully earned and non-refundable upon signing the agreement. Specifically, Aw franchisees must pay an initial franchise fee of $30,000. Upon signing the franchise agreement, $15,000 of this fee is due in cash. The remaining $15,000 is due within five days of Aw's written approval of the restaurant site.
However, there is an exception for franchisees in Illinois. Due to Aw's financial condition, Illinois law requires Aw to defer all initial franchise fees until Aw has completed all initial obligations to the franchisee and the franchisee has commenced business. This addendum modifies the standard franchise agreement for franchisees operating in Illinois.
This means that, outside of Illinois, Aw recognizes the initial franchise fee as fully earned upon signing the agreement, acknowledging the expenses and lost opportunities Aw incurs by granting the franchise. However, franchisees in Illinois will not have to pay the initial franchise fee until Aw has fulfilled its initial obligations and the franchisee has started operations.