When is reimbursement for insurance costs due to Aw?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
| TYPE OF FEE1,3 | AMOUNT | DUE DATE | REMARKS |
|---|---|---|---|
| omissions, our enforcement of this Agreement, our defense of our actions taken under this Agreement or your breach of the Franchise Agreement. | |||
| Costs and Attorney's Fees | Will vary under circumstances | As incurred | You must reimburse us for costs and attorney's fees we incur in actions against you to enforce the Franchise Agreement. |
| Reimbursement for insurance costs | Costs and premiums incurred by us on your behalf. | Upon demand | Payable if we incur costs to purchase insurance for you if you fail to do so. |
| Reimbursement of Taxes | Actual assessed taxes against us for your operation of your business or on any payments you make to us. | Upon demand | Only payable if taxes of this type are assessed against us. |
| Software license fees | Undetermined since proprietary software has not yet been developed. | As arranged | Payable if we develop proprietary software that you must use for operating your Papa Ray’s Pizza Restaurant. |
Source: Item 6 — OTHER FEES (FDD pages 13–16)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, franchisees must reimburse Aw for insurance costs upon demand. This reimbursement is required if Aw incurs costs to purchase insurance on behalf of the franchisee because the franchisee failed to obtain the necessary insurance coverage themselves. The amount due will be the costs and premiums Aw incurred.
This means that if a franchisee neglects to maintain the required insurance, Aw has the right to secure the insurance coverage and then bill the franchisee for the expenses. This is a fairly standard practice in franchising, designed to protect both the franchisor and franchisee from potential liabilities and ensure consistent brand standards.
For a prospective Aw franchisee, this highlights the importance of maintaining adequate insurance coverage as mandated by the franchise agreement. Failure to do so not only puts the business at risk but also creates an immediate financial obligation to reimburse Aw for any insurance premiums they pay on the franchisee's behalf. This could impact the franchisee's cash flow and profitability.