Does the one-year limitation on claims in the Aw franchise agreement apply to claims by Aw against the franchisee for underreporting of Gross Revenue?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- 18.8 Limitation of Claims. Except for claims by us against you concerning the underreporting of Gross Revenue, for non-payment of any fee due under this Agreement, intellectual property infringement/violations, claims for violation of post-termination obligations, including, but not limited to, a breach of the covenant not to compete, and for claims against you by us relating to third party claims or suits brought against us as a result of your operation of the Papa Ray's Pizza Restaurant business, any and all claims arising out of or relating to this Agreement or the relationship between or among the parties hereto shall be barred unless an arbitration or legal proceeding is commenced within one (1) year from the date the claiming party knew or should have known of the facts giving rise to such claims.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the one-year limitation on claims does not apply to claims by Aw against a franchisee concerning the underreporting of Gross Revenue. The franchise agreement states that the one-year limitation on claims arising out of or relating to the agreement does not apply to claims by Aw against the franchisee concerning the underreporting of Gross Revenue, non-payment of any fee due under the agreement, intellectual property infringement/violations, claims for violation of post-termination obligations, and claims against the franchisee by Aw relating to third party claims or suits brought against Aw as a result of the franchisee's operation of the Papa Ray's Pizza Restaurant business.
This means that Aw has an unlimited time to bring a claim against a franchisee for underreporting Gross Revenue, while the franchisee is limited to one year for most claims against Aw. This is a significant advantage for Aw, as it allows them more time to discover and pursue claims against franchisees.
For a prospective Aw franchisee, this clause highlights the importance of accurate and transparent financial reporting. Underreporting revenue, even unintentionally, could expose the franchisee to potential legal action from Aw without the protection of a one-year statute of limitations. Franchisees should maintain meticulous records and seek professional accounting advice to ensure compliance with Aw's reporting requirements.