factual

Does the post-term covenant not to compete prevent an Aw franchisee from soliciting former customers?

Aw Franchise · 2025 FDD

Answer from 2025 FDD Document

  • 17.1 Covenant Not To Compete. Upon assignment, termination or expiration (without renewal) of this Agreement, you (and your Owners) agree that for a period of two (2) years, commencing on the effective date of assignment, termination or expiration, or the date on which you begin complying with the covenants herein, whichever is later, you (and your Owners) will not:
  • (d) directly or indirectly, solicit or sell products or services to any former customer of your Papa Ray's Pizza Restaurant.
  • 17.3 Enforcement of Covenants Not to Compete. You acknowledge that violation of the covenants not to compete contained in this Agreement would result in immediate and irreparable injury to us for which no adequate remedy at law will be available. Accordingly, you hereby acknowledge that we may seek to obtain the entry of an injunction prohibiting any conduct by you or your Owners in violation of the terms of the covenants not to compete set forth in this Agreement. You expressly agree that it may conclusively be presumed that any violation of the terms of said covenants not to compete was accomplished by and through your unlawful use of our Confidential Information. Further, you expressly agree that the existence of any claims you may have against us, whether or not arising from this Agreement, shall not constitute a defense to the enforcement by us of the covenants not to compete set forth in this Agreement. You further agree to pay all costs and expenses (including reasonable attorneys' and experts' fees) incurred by the us in connection with the enforcement of those covenants not to compete set forth in this Agreement.

Source: Item 22 — CONTRACTS (FDD pages 39–40)

What This Means (2025 FDD)

According to Aw's 2025 Franchise Disclosure Document, the post-term covenant not to compete does prevent a franchisee from soliciting former customers. Specifically, after the franchise agreement is assigned, terminated, or expires without renewal, the franchisee (and their Owners) are subject to certain restrictions for two years.

One of these restrictions explicitly prohibits the franchisee from directly or indirectly soliciting or selling products or services to any former customer of their Aw restaurant. This means that upon leaving the Aw system, a former franchisee cannot actively try to win back customers they served during their time as an Aw franchisee.

Aw also has the ability to seek an injunction prohibiting any conduct that violates the terms of the covenants not to compete. The franchisee also agrees to pay all costs and expenses (including reasonable attorneys' and experts' fees) incurred by Aw in connection with the enforcement of those covenants not to compete.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.