Are the loans that Aw provides to related entities secured or unsecured?

According to Aw's 2025 Franchise Disclosure Document, the loans that Aw provides to related entities are unsecured. Specifically, as of December 31, 2024 and 2023, the balance due from related parties was $51,502 and $51,502 respectively. These loans do not bear interest and are due on demand.

This arrangement carries significant implications for prospective franchisees. Because the loans are unsecured, Aw does not have specific collateral to recover in case of default by the related entity. The fact that these loans are non-interest bearing means that Aw is not generating income from these advances, which could affect the company's profitability. The "due on demand" clause provides Aw with some flexibility to recall the funds, but the actual ability to recover the funds depends on the related entity's financial condition at the time of the demand.

Franchisees should consider the potential risks associated with these related-party transactions. While it is not uncommon for franchisors to engage in financial dealings with related entities, the terms and conditions of such transactions should be carefully scrutinized. Franchisees should seek clarification from Aw regarding the nature of the related entities, the purpose of the loans, and the measures in place to ensure the recoverability of these funds. Understanding these aspects will help franchisees assess the financial stability and management practices of Aw.