What specific activities are the owners of an Aw entity franchisee obligated to engage in or refrain from engaging in?
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 have specific obligations they must adhere to. These owners must personally guarantee the franchisee's obligations under the Franchise Agreement. This guarantee extends to being bound by and personally liable for any breaches of the agreement. These breaches include both monetary obligations and the requirement to take or avoid specific actions, as well as engaging or avoiding specific activities.
One critical obligation is maintaining the confidentiality of Aw's confidential information, as detailed in the Franchise Agreement. Additionally, owners must comply with the non-compete covenants outlined in Item 17 of the FDD. This means owners must not only ensure the financial stability of the franchise but also actively protect Aw's proprietary information and competitive market position.
The "Guaranty and Assumption of Obligations" agreement is an exhibit to the Franchise Agreement, further emphasizing the importance of these obligations. This agreement ensures that the owners of the franchisee entity are fully committed to upholding the standards and requirements set forth by Aw, safeguarding the brand's reputation and operational integrity. This is a common practice in franchising, as it ensures that the franchisor has recourse to the personal assets of the owners, not just the business entity, in case of a breach.