Can Aw terminate the franchise agreement if an Owner of the franchise is convicted of a felony?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
ded in Paragraphs 14.2 and 14.3, provided that if the sale to such purchaser is not completed within one-hundred twenty (120) days after delivery of such offer to us, or if there is a material change in the terms of the offer, we will again have the right of first refusal herein provided.
15. TERMINATION OF THE FRANCHISE.
- 15.1 By the Company Without Opportunity to Cure. You will be deemed to be in default and we may, at our option, terminate this Agreement and all rights granted by this Agreement, without affording you an opportunity to cure the default, effective immediately upon delivery of notic
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw can terminate the franchise agreement without an opportunity to cure if an owner is convicted of a felony. Specifically, if you or any of your owners are convicted of or plead no contest to a felony, Aw has the right to terminate the agreement immediately.
This is a significant clause for prospective franchisees. It means that a felony conviction of any owner, even if the felony is unrelated to the business, can result in the immediate termination of the franchise agreement. There is no opportunity to correct the issue; termination is effective immediately upon notice.
This type of clause is not uncommon in franchise agreements, as franchisors want to protect their brand's reputation. Dishonest or unethical conduct that may adversely affect the reputation of the company, the restaurant, the system, or the goodwill associated with the marks can also lead to immediate termination. Franchisees should carefully consider this clause and ensure that all owners understand the potential consequences of a felony conviction.