Must the owners of an entity franchisee for Aw personally guarantee obligations under the Franchise Agreement?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
rovide proper customer service during all hours of operation.
If you are an entity, your owners must not only personally guarantee your obligations under the Franchise Agreement, but must also agree to be bound by, and personally liable for the breach of, every provision in these agreements, both monetary obligations and obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities, including the preservation of the confidentiality of our confidential information as defined in the Franchise Agreement and compliance with the covenants not to compete described in Item 17. The "Guaranty and Assumption of Obligations" is an exhibit to the Franchise Agreement.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 32–33)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, if you operate your Papa Ray's Pizza Restaurant franchise as an entity, the owners of that entity must provide a personal guarantee for the obligations under the Franchise Agreement. This means that the owners are not only guaranteeing the monetary obligations of the franchise, but also agreeing to be personally liable for any breaches of the agreement. This includes obligations to take or refrain from taking specific actions, engaging or refraining from engaging in specific activities, maintaining the confidentiality of Aw's confidential information, and complying with non-compete covenants. This guarantee is formalized in a document called the "Guaranty and Assumption of Obligations," which is an exhibit to the Franchise Agreement.
This requirement is further reinforced by the stipulation that upon execution of the Franchise Agreement, all owners of the franchisee entity must execute the Guaranty and Assumption of Obligations attached as Exhibit 2. This ensures that Aw has recourse to the personal assets of the owners should the franchisee entity fail to meet its obligations. The personal guarantee remains in effect for the term of the agreement and beyond, as provided in the agreement, ensuring long-term accountability.
The Guaranty and Assumption of Obligations includes waivers by the owners, such as waiving acceptance and notice of acceptance by Aw, notice of demand for payment, protest and notice of default, and any right to require that an action be brought against the franchisee before pursuing the guarantors. The owners also consent to joint and several liability with other guarantors, immediate liability upon demand if the franchisee fails to perform, and that their liability will not be affected by any extensions of time or credit granted to the franchisee. This comprehensive guarantee ensures that Aw has strong protection against potential defaults or breaches of the Franchise Agreement by entity franchisees.