How many times can an Aw franchisee fail to submit financial statements before Aw can terminate the 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, Aw can terminate the franchise agreement if a franchisee fails to submit financial statements, reports, or other required data on three or more separate occasions within any twelve-consecutive-month period. This termination can occur whether or not the franchisee corrects the failures after receiving notice.
This policy emphasizes the importance of timely and accurate financial reporting for Aw franchisees. Consistently failing to meet these obligations, even if the issues are eventually resolved, can lead to the termination of the franchise agreement. This highlights the need for franchisees to have robust systems in place to manage and submit financial data as required by Aw.
For a prospective Aw franchisee, this condition underscores the necessity of maintaining meticulous financial records and adhering strictly to the franchisor's reporting deadlines. The relatively low threshold of three failures within a year before termination is possible suggests that Aw places a high priority on consistent compliance with financial reporting requirements.