Does Aw require the proposed assignee to have sufficient financial resources to own and operate a Papa Ray's Restaurant?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
t a concurrent transfer of this Agreement and the franchise rights granted hereunder to the same transferee. Any such assignment or transfer without our prior written approval will constitute a breach of this Agreement and will convey no rights to or interests in the franchise, the franchisee entity, your Papa Ray's Pizza Restaurant or its assets.
- 14.3 Conditions for Approval of Assignment. If you (and your Owners) are in compliance with this Agreement, we will not unreasonably withhold our 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, if a franchisee wishes to assign their franchise agreement to someone else, Aw will assess the proposed assignee. Aw will not unreasonably withhold approval of an assignment if the franchisee and their owners are in compliance with the agreement. However, the proposed assignee must be of good moral character, possess sufficient business experience, aptitude, and financial resources to successfully own and operate a Papa Ray's Restaurant. The assignee also must not have any conflicting interests that are unacceptable to Aw and must meet Aw's standards for franchisees at that time.
In addition to the assignee's qualifications, several other conditions must be met for the assignment to be approved. The assignee must assume all obligations of the current franchisee and their owners. All outstanding payments, including royalty fees, marketing fund contributions, and purchase amounts, must be paid. The assignee must also complete the initial training program to Aw's satisfaction. If required, the lessor of the premises must consent to the assignment or sublease. The assignee must also execute Aw's current franchise agreement, owner guarantees, and ancillary agreements, or an assignment and assumption agreement.
Furthermore, either the current franchisee or the assignee must pay Aw a transfer fee. The standard transfer fee is $9,000.00, but it is reduced to $5,000.00 if the assignee is an existing franchisee approved for an additional franchise. The current franchisee and their owners must also execute a general release of claims against Aw. Aw must approve the material terms and conditions of the assignment, ensuring that the price and payment terms do not negatively impact the restaurant's future operations. Finally, any installment payments from the assignee to the current franchisee must be subordinate to the assignee's ongoing obligations to Aw, such as royalty fees and marketing fund contributions.