Who is subject to the post-term covenant not to compete for an Aw franchise?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
of this Section 16.
- 16.10 Continuing Obligations. All obligations of the Company and you which expressly or by their nature survive the expiration or termination of this Agreement will continue in full force and effect subsequent to and notwithstanding its expiration or termination and until they are satisfied or by their nature expire.
17. POST-TERM COVENANT NOT TO COMPETE.
- 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,
- or (b) any entity which is granting franchises or licenses or entering into joint ventu
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, both the franchisee and their owners are subject to the post-term covenant not to compete. This restriction applies upon assignment, termination, or expiration (without renewal) of the Franchise Agreement.
Specifically, the franchisee and their owners agree not to engage in any restaurant business selling similar products or services to Aw's Papa Ray's Pizza concept for a period of two years. This two-year period starts from the effective date of assignment, termination, or expiration, or the date on which they begin complying with the covenants, whichever is later.
This restriction includes not having a direct or indirect interest in any competitive restaurant business within ten miles of the former Aw location or any other Aw location. This encompasses roles as an owner, investor, partner, director, officer, employee, consultant, representative, or agent. The covenant also extends to preventing involvement with any entity that grants franchises or licenses for similar restaurant businesses. However, owning 5% or less of the securities of a publicly traded company is an exception to this rule.