Does Aw have the option to require the assignee to execute an assignment and assumption agreement satisfactory to 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)
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 an assignment and assumption agreement. Specifically, prior to the effective date of the assignment, the assignee (and, if an entity, its direct or indirect owners) have, at Aw's 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 Aw 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 agreement satisfactory to Aw whereby the assignee assumes the franchisee's obligations under this Agreement.
This means that if a franchisee wants to sell their Aw franchise to someone else, Aw has the right to make the new franchisee sign an agreement that legally transfers all of the original franchisee's responsibilities and obligations to them. This agreement must be satisfactory to Aw, giving them control over the terms and conditions of the transfer. Alternatively, Aw can make the assignee sign the then-current franchise agreement, which may have different terms than the original agreement.
This is a standard practice in franchising, as it allows Aw to ensure that any new franchisee meets their standards and is legally bound to uphold the franchise agreement. For a prospective franchisee, this highlights the importance of understanding the terms of the franchise agreement and the conditions under which it can be transferred. It also means that if they plan to sell their franchise in the future, the potential buyer will need to be approved by Aw and may need to agree to new terms.