Does Aw have the option to require the assignee to execute such other ancillary agreements as are then customarily used by Aw?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
r approval of an assignment, provided that the proposed assignee is, in our opinion, of good moral character and has sufficient business experience, aptitude and financial resources to own and operate a Pap Ray's Restaurant, does not have any conflicting interests unacceptable to us, and otherwise meets our then applicable standards for franchisees. In addition the following conditions must be met prior to, or concurrently with, the effective date of the assignment:
- (a) all obligations of you and your Owners incurred in connection with this Agreement have been assumed by the assignee and, as applicable, its owners;
- (b) you have paid such royalty fees, marketing fund contributions, amounts for purchases and any other amounts owed to us or our affiliates which are then due and unpaid;
- (c) the assignee completes the initial training program required of new franchisees to our satisfaction;
- (d) if required, the lessor of the Premises has consented to your assignment or sublease of the Premises to the proposed assignee;
- (e) the assignee (and, if an entity, its direct or indirect owners) have, at our option, executed and agreed to be bound by either: (a) the form of franchise agreement, owner guarantees and such other ancillary agreements as are then customarily used by us in the grant of franchises for a Papa Ray's Pizza Restaurant, which may provide for royalty fees, marketing fund contributions and other fees and terms and conditions that differ from those contained in this Agreement; or (b) an assignment and assumption agree
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw has the option to require the assignee to execute ancillary agreements that are customarily used by them. Specifically, prior to the effective date of the assignment, the assignee (and their owners, if the assignee is an entity) must execute and agree to be bound by either the current form of franchise agreement, owner guarantees, and other ancillary agreements that Aw uses for new Papa Ray's Pizza Restaurant franchises, or an assignment and assumption agreement that is satisfactory to Aw, where the assignee assumes the franchisee's obligations under the existing agreement. The new franchise agreement may include royalty fees, marketing fund contributions, and other fees and terms that differ from the original agreement.
This means that if a franchisee wants to sell their Aw franchise, the person or entity buying it might have to agree to the terms of Aw's current franchise agreement, which could be different from the terms of the agreement the original franchisee signed. This could include different fees, contribution rates, or operational requirements. Alternatively, the assignee can agree to an assignment and assumption agreement, which binds them to the original franchise agreement's terms.
This condition is fairly standard in franchising, as it allows Aw to ensure that new operators meet their current standards and obligations. It also protects the brand by ensuring that all franchisees are operating under similar guidelines. However, it could also make it more difficult to sell a franchise if the current franchise agreement is less favorable than the one the original franchisee signed. The prospective franchisee should be aware of these potential changes and factor them into their decision-making process.
In addition to the assignee executing the agreements, the franchisee or the assignee must pay Aw a transfer fee. The transfer fee is $9,000, but if the assignee is an existing franchisee that Aw has approved for an additional franchise, the transfer fee is $5,000.