What is the minimum gross revenue requirement for an Aw franchise, and what happens if it's not met?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
resale, retail sale or further distribution by such third party. You shall not sell any products offered for sale through the Papa Ray's Pizza Restaurant through any Alternative Distribution Channels.
- 2.7 Minimum Annual Gross Revenue. Beginning with the second year of operation of the Papa Ray's Pizza Restaurant, you must have annual Gross Revenue for each year of operation of a minimum of Three Hundred Thousand Dollars ($300,000.00) ("Minimum Annual Gross Revenue"). If you do not achieve the Minimum Annual Gross Revenue for any year of operation,
you will be given the next twelve (12) months to increase revenues so that you meet the Minimum Annual Gross Revenue. If you do not meet the Minimum Annual Gross Revenue after having been given a twelve (12) month period to increase sales and achieve the Minimum Annual Gross Revenue, we may either (i) increase the amount that you must expend on local advertising pursuant to Paragraph 12.2 herein to an amount we in our discretion deem necessary in order to increase revenues, (ii) reduce or eliminate your Protected Area upon delivery of written notice to you, and thereafter, we may establish another Papa Ray's Pizza Restaurant in the former Protected Area or (iii) terminate this Agreement upon delivery of written notice to you.
3. RENEWAL OF FRANCHISE
- 3.1 Franchisee's Right to Renew.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, beginning in the second year of operation, a Papa Ray's Pizza Restaurant franchise must achieve a minimum annual gross revenue of $300,000.00. Gross revenue includes receipts from all sales of food, beverages, merchandise, products, and services, whether for cash or credit, but excludes sales, use, or service taxes collected from customers, promotional discounts, authorized employee discounts, and complimentary products for promotional or charitable purposes.
If an Aw franchisee fails to meet the $300,000.00 minimum annual gross revenue, they will be given an additional 12 months to improve their revenue. If, after this 12-month period, the franchisee still does not meet the minimum, Aw has the option to take corrective actions.
Aw may choose to increase the amount the franchisee must spend on local advertising to boost sales, reduce or eliminate the franchisee's protected area (allowing Aw to establish another Papa Ray's Pizza Restaurant in that area), or terminate the franchise agreement entirely. This underscores the importance of a franchisee's business planning and execution to meet the required revenue targets and avoid potential penalties or termination of the franchise agreement.