Can Aw require the assignee to execute owner guarantees?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
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;
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 (and, if the assignee is an entity, its direct or indirect owners) to execute owner guarantees when a franchise is transferred. Specifically, Aw can require the assignee to agree to be bound by the form of franchise agreement, owner guarantees, and other ancillary agreements that Aw then customarily uses when granting franchises. These agreements may include different royalty fees, marketing fund contributions, and other terms and conditions than those in the original franchise agreement.
This means that if you decide to sell your Aw franchise, the person or entity buying it might have to sign an agreement that includes owner guarantees. This could make it easier for Aw to pursue the new owner's personal assets if the franchise doesn't do well or if the new owner violates the franchise agreement. The new agreement could also have different financial terms that could affect the profitability of the franchise for the new owner.
As a prospective franchisee, it is important to understand that Aw retains significant control over the assignment process and the terms that the assignee must accept. You should discuss with Aw what the current requirements are for new franchisees and what types of changes an assignee might expect in the new franchise agreement and associated guarantees. This will help you understand the potential impact on the value and transferability of your Aw franchise.