Does Aw have the right of first refusal to acquire a franchisee's business?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN FRANCHISE AGREEMENT | SUMMARY |
|---|---|---|
| n. Franchisor’s right of first refusal | Section 14.6 | We can match any offer for your business or an |
| to acquire franchisee’s business | ownership interest in you. | |
| o. Franchisor’s option to purchase franchisee’s business | Section 16.7 | We may within 30 days of termination or expiration purchase certain assets of your Papa Ray’s Pizza Restaurant at lesser of cost or fair market value. |
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 does have the right of first refusal to acquire a franchisee's business. Specifically, Aw can match any offer a franchisee receives for their business or for an ownership interest in the business. This is detailed in Section 14.6 of the franchise agreement.
This right of first refusal means that if a franchisee wants to sell their Aw franchise, they must first offer Aw the opportunity to buy it on the same terms as any other potential buyer. This gives Aw significant control over who becomes a new franchisee within their system. It also allows Aw to maintain brand consistency and operational standards by ensuring that they have the option to acquire the business themselves rather than allowing an unapproved buyer to take over.
Additionally, Aw has the option to purchase certain assets of the Papa Ray’s Pizza Restaurant within 30 days of termination or expiration of the franchise agreement. The purchase price will be the lesser of the cost or fair market value of the assets. This provides Aw with another avenue to gain control of a franchise location upon the end of the franchise agreement.
These provisions are common in franchise agreements, as they protect the franchisor's brand and business model. However, prospective franchisees should carefully consider the implications of these rights, as they may limit the franchisee's ability to sell their business to the highest bidder or to realize the full value of their investment.