Does Aw require owner guarantees from the assignee?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
r approval of an assignment, provided that the proposed assignee is, in our opinion, of good moral character and has sufficient business experience, aptitude and financial resources to own and operate a Pap Ray's Restaurant, does not have any conflicting interests unacceptable to us, and otherwise meets our then applicable standards for franchisees. In addition the following conditions must be met prior to, or concurrently with, the effective date of the assignment:
- (a) all obligations of you and your Owners incurred in connection with this Agreement have been assumed by the assignee and, as applicable, its owners;
- (b) you have paid such royalty fees, marketing fund contributions, amounts for purchases and any other amounts owed to us or our affiliates which are then due and unpaid;
- (c) the assignee completes the initial training program required of new franchisees to our satisfaction;
- (d) if required, the lessor of the Premises has consented to your assignment or sublease of the Premises to the proposed assignee;
- (e) 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 agree
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, whether owner guarantees are required from the assignee depends on Aw's option. Specifically, prior to the effective date of the assignment, the assignee (and its direct or indirect owners, if the assignee is an entity) must execute and agree to be bound by either the current form of franchise agreement, owner guarantees, and ancillary agreements, or an assignment and assumption agreement satisfactory to Aw, where the assignee assumes the original franchisee's obligations. The franchise agreement may include differing royalty fees, marketing fund contributions, and other terms and conditions.
This means that if you are looking to assign your Aw franchise to a new owner, Aw has the discretion to require the new owner (and their owners, if applicable) to sign owner guarantees. This is a significant point for both the assignor (current franchisee) and the assignee (potential new franchisee). The assignor needs to be aware that the assignee may face more stringent terms than the original agreement. The assignee needs to understand that they may be required to provide personal guarantees, potentially putting their personal assets at risk.
This condition is not uncommon in franchising, as franchisors want to ensure the financial stability and commitment of new franchisees. However, the specific terms and conditions can vary widely. It is important for both parties involved in the assignment to carefully review the proposed agreements and understand their obligations. The transfer also requires payment of a transfer fee: $9,000, or $5,000 if the assignee is an existing franchisee approved for an additional franchise.