What specific actions are the owners of an Aw entity franchisee obligated to take or refrain from taking?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
If you are an entity, your owners must not only personally guarantee your obligations under the Franchise Agreement, but must also agree to be bound by, and personally liable for the breach of, every provision in these agreements, both monetary obligations and obligations to take or refrain from taking specific actions or to engage or refrain from engaging in specific activities, including the preservation of the confidentiality of our confidential information as defined in the Franchise Agreement and compliance with the covenants not to compete described in Item 17. The "Guaranty and Assumption of Obligations" is an exhibit to the Franchise Agreement.
Source: Item 15 — OBLIGATION TO PARTICIPATE IN THE ACTUAL OPERATION OF THE FRANCHISE BUSINESS (FDD pages 32–33)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, if a franchisee is an entity, the owners must not only guarantee the entity's obligations under the Franchise Agreement, but they must also agree to be bound by and personally liable for any breach of the agreement. This includes both monetary obligations and the obligations to take or refrain from taking specific actions, or to engage or refrain from engaging in specific activities.
This obligation extends to preserving the confidentiality of Aw's confidential information as defined in the Franchise Agreement and complying with the covenants not to compete as described in Item 17 of the FDD. The specific details of these obligations are outlined in the "Guaranty and Assumption of Obligations," which is an exhibit to the Franchise Agreement.
In practical terms, this means that the owners of a franchisee entity are personally on the hook for ensuring the business complies with all aspects of the Franchise Agreement. They can be held individually liable if the business fails to meet its financial obligations or violates any operational requirements. This personal liability underscores the importance of thoroughly understanding the Franchise Agreement and ensuring the business adheres to all its terms.
Prospective Aw franchisees who plan to operate as an entity should carefully review the "Guaranty and Assumption of Obligations" exhibit to fully understand the scope of their personal responsibilities and potential liabilities. They should also consult with legal and financial advisors to assess the implications of this personal guarantee.