Can Aw terminate the franchise agreement if an Owner of the franchise engages in any dishonest conduct?
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 engages in dishonest or unethical conduct. Specifically, Aw can terminate the agreement if the owner is convicted of or pleads no contest to a felony, or engages in any dishonest or unethical conduct that may adversely affect the reputation of the company, the Papa Ray's Pizza Restaurant, the System, or the goodwill associated with the Marks. This termination is effective immediately upon delivery of the termination notice.
This provision gives Aw broad authority to terminate the franchise agreement based on the conduct of the owner, even without a conviction. The standard of "adversely affect the reputation" is subjective and could be interpreted broadly. This means that even if the conduct does not lead to a criminal conviction, Aw could still terminate the agreement if it believes the conduct harms its brand or reputation.
For a prospective franchisee, this clause highlights the importance of ensuring that all owners maintain high ethical standards. Any behavior that could be perceived as dishonest or unethical, even if it occurs outside of the business, could potentially lead to termination of the franchise agreement. Franchisees should carefully consider the implications of this provision and seek legal advice to fully understand their rights and obligations.
It is common for franchise agreements to include provisions allowing the franchisor to terminate the agreement for cause, including criminal activity or conduct that harms the brand. However, the specific terms and conditions can vary, so it is important for franchisees to carefully review the termination provisions in their franchise agreement.