Can Aw require specific terms and provisions to be included in the lease or sublease agreement?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- 4.2 Lease of Premises. Any lease or sublease of the Premises must be approved by us before it is executed by you and we can require that certain terms and provisions be included in the lease or sublease.
At our option, we may require that the lease: (i) have a term, with initial and renewal terms, at least equal to the initial term of this Agreement; (ii) be collaterally assigned to us (with the consent of the lessor, if required), by execution of the Collateral Assignment of Lease attached hereto as Exhibit 3 (the assignment may be exercised only upon your default under the lease or this Agreement or the expiration or termination of this Agreement); (iii) provides that the lessor shall give written notice to us (concurrently with you) of any default by you under the lease, and will give us an additional fifteen (15) days to cure any default not cured by you during the cure period and assign the lease to us if defaults are cured by us; (iv) permits the use on the Premises of all signs required by the us for Papa Ray's Pizza Restaurants, subject to applicable local laws, codes and ordinances; (v) provides that on expiration or termination of your Franchise Agreement, we may enter the leased
premises and remove all signs, sign-faces and other items identifying Marks; (vi) provides that the Premises will only be used for the operation of a Papa Ray's Pizza Restaurant; and (vii) provides that the lessor will not lease other premises in the same shopping center to a competing business.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw must approve any lease or sublease before it is executed by the franchisee, and Aw can require that certain terms and provisions be included in the lease or sublease.
Aw has the option to require that the lease: (i) have a term, with initial and renewal terms, at least equal to the initial term of the Franchise Agreement; (ii) be collaterally assigned to Aw (with the consent of the lessor, if required), by execution of the Collateral Assignment of Lease attached as an exhibit; (iii) provides that the lessor shall give written notice to Aw (concurrently with the franchisee) of any default by the franchisee under the lease, and will give Aw an additional fifteen (15) days to cure any default not cured by the franchisee during the cure period and assign the lease to Aw if defaults are cured by Aw; (iv) permits the use on the Premises of all signs required by Aw for Papa Ray's Pizza Restaurants, subject to applicable local laws, codes and ordinances; (v) provides that on expiration or termination of the Franchise Agreement, Aw may enter the leased premises and remove all signs, sign-faces and other items identifying Marks; (vi) provides that the Premises will only be used for the operation of a Papa Ray's Pizza Restaurant; and (vii) provides that the lessor will not lease other premises in the same shopping center to a competing business.
This level of control over the lease agreement is common in franchising, as it protects the brand's interests and ensures uniformity across locations. The franchisee is responsible for finding a suitable site, but Aw retains the right to approve the site and the lease terms. This ensures that the location meets Aw's standards and that Aw has certain protections in place, such as the ability to take over the lease if the franchisee defaults.
A prospective Aw franchisee should carefully review the lease requirements and ensure they are able to comply with them. They should also consider the potential costs associated with meeting these requirements, such as the cost of remodeling the premises to meet Aw's specifications.