Does Aw require approval of a transfer by a franchisee?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION | SUMMARY |
|---|---|---|
| IN FRANCHISE AGREEMENT | ||
| h. "Cause" defined – non-curable defaults | Section 15.1 | Failure to locate site or open Papa Ray's Pizza Restaurant in time required, failure to satisfactorily complete initial training, abandonment, cease operating for 2 or more days, material misrepresentations, conviction of a felony, dishonest or unethical conduct, unauthorized transfers, unauthorized use or disclosure of confidential information or Operations Manual, unauthorized use of Marks, having interest in competing business, creation of a threat to public health or safety not corrected within 24 hours, 3 or more defaults in any 12 month period, failure to attend training or conference 2 or more times, filing for bankruptcy relief. |
| i. Your obligations on termination/ non-renewal | Section 16 | Pay outstanding amounts, cease operating, cease using Marks, return items containing Marks, cancel fictitious names, transfer telephone number to us, return of confidential information, assign lease at our option or de identify the restaurant premises (see also o. and r. below) |
| j. | Section 14.1 | No restriction on our right to assign. |
| Assignment of contract by | ||
| franchisor. | ||
| k. "Transfer" by franchisee – definition | Section 14.2. | Includes transfer of any interest in Franchise Agreement, Papa Ray's Pizza Restaurant or a substantial portion of its assets or ownership change in franchisee. |
| l. Franchisor approval of transfer by franchisee | Sections 14.2 and 14.3 | Except for transfer to entity controlled by you, we have right to approve all transfers, but will not unreasonably withhold approval. Transfer to an entity is effective upon 30 days' notice to us once you sign our assignment agreement and all owners guaranty the franchise agreement obligations of the entity. |
| m. Conditions for franchisor approval of transfer | Section 14.3. | You have complied with Franchise Agreement during the term, all amounts due us and our affiliates are paid, transferee qualifies and completes training, lessor consents to lease assignment, transferee assumes your agreement or signs new agreement for remainder of term (at our option), transfer fee paid, general release signed by you and your owners, we approve terms of transfer and you subordinate buyer's debt to you to our interest in franchise business, and you or transferee remodel the restaurant premises (see also r below). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 34–36)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw requires franchisee transfers to be approved, as detailed in Item 17. Specifically, Aw has the right to approve all transfers, but the franchisor will not unreasonably withhold approval. However, a transfer to an entity controlled by the franchisee is effective upon 30 days' notice to Aw once the franchisee signs Aw's assignment agreement and all owners guaranty the franchise agreement obligations of the entity.
Item 17 also lists conditions for Aw's approval of a transfer. The franchisee must have complied with the Franchise Agreement during its term, and all amounts due to Aw and its affiliates must be paid. The transferee must qualify and complete training, and the lessor must consent to the lease assignment. The transferee must assume the existing agreement or sign a new agreement for the remainder of the term, at Aw's option. Additionally, a transfer fee must be paid, a general release signed by the franchisee and their owners, and Aw must approve the terms of the transfer. The franchisee or transferee may also be required to remodel the restaurant premises.
These stipulations are typical in franchising, as they allow Aw to maintain standards and protect the brand. The right to approve transfers ensures that new franchisees meet Aw's qualifications and are likely to uphold the brand's reputation. The conditions for approval, such as requiring the transferee to complete training and remodel the premises if necessary, further safeguard Aw's interests and the consistency of the franchise system.
Prospective franchisees should carefully review Section 14 of the Franchise Agreement, as referenced in Item 17, to fully understand the transfer process and requirements. Understanding these conditions is crucial for planning an exit strategy or succession plan for the Aw franchise.