What is the starting date for the two-year non-compete period after termination of an Aw franchise?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.1 Covenant Not To Compete. Upon assignment, termination or expiration (without renewal) of this Agreement, you (and your Owners) agree that for a period of two (2) years, commencing on the effective date of assignment, termination or expiration, or the date on which you begin complying with the covenants herein, whichever is later, you (and your Owners) will not:
- (a) have any direct or indirect interest as an owner, investor, partner, director, officer, employee, consultant, representative or agent, or in any other capacity, in (a) any restaurant business selling products or services substantially similar to a Papa Ray's Pizza Restaurant concept then being offered by us (except other Papa Ray's Pizza Restaurants you are operating pursuant to franchise agreements with us), which is located (i) within ten (10) miles of the Premises of your Papa Ray's Pizza Restaurant or (i) within ten (10) miles of the premises of any other Papa Ray's Pizza Restaurant,
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the two-year non-compete period begins on the later of two possible dates. The first is the effective date of the assignment, termination, or expiration of the franchise agreement. The second is the date on which the franchisee begins complying with the non-compete covenants outlined in the agreement.
This means that if a franchisee ceases operating the Aw business immediately upon termination but does not fully comply with all aspects of the non-compete agreement until a later date, the two-year period starts from that later date of full compliance. This could include actions like ceasing to use confidential information or transferring domain names as required by the franchise agreement.
For a prospective Aw franchisee, this clause highlights the importance of understanding and adhering to all post-termination obligations promptly to ensure the non-compete period begins as soon as possible. Failure to comply swiftly could extend the period during which the franchisee is restricted from engaging in competitive activities.