Does Aw have the option to require the assignee to execute a new franchise agreement?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
In addition the following conditions must be met prior to, or concurrently with, the effective date of the assignment:
(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 agreement satisfactory to us whereby the assignee assumes your obligations under this Agreement;
(f) You or the assignee must have paid us a transfer fee of Nine Thousand Dollars ($9,000.00).
In the event the assignee is an existing franchisee that we have approved for an additional franchise, the transfer fee shall be Five Thousand Dollars ($5,000.00);
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 a new franchise agreement. Specifically, prior to the effective date of the assignment, the assignee must (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 the current franchise agreement; or (b) an assignment and assumption agreement satisfactory to Aw whereby the assignee assumes the franchisee's obligations under the current Agreement.
This means that if a franchisee wants to sell their Aw franchise, Aw has the right to make the new owner sign a new franchise agreement. This new agreement could have different terms than the original agreement, including different royalty fees, marketing fund contributions, and other fees.
For a prospective franchisee, this highlights the importance of understanding that the terms of the franchise agreement can change over time. If they plan to sell their franchise in the future, they cannot guarantee that the new owner will be able to operate under the same terms. This could affect the value of the franchise and the ability to find a buyer. The transfer may also be affected by the payment of a transfer fee. The standard transfer fee is Nine Thousand Dollars ($9,000.00). However, if the assignee is an existing franchisee that Aw has approved for an additional franchise, the transfer fee is Five Thousand Dollars ($5,000.00).