Is there any exception to the requirement that the Aw franchisee and assignee pay all amounts owed to Aw?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- (b) you have paid such royalty fees, marketing fund contributions, amounts for purchases and any other amounts owed to us or our affiliates which are then due and unpaid;
16. RIGHTS OF THE COMPANY AND OBLIGATIONS OF FRANCHISEE UPON TERMINATION OR EXPIRATION OF THE FRANCHISE.
- 16.1 Payment of Amounts Owed to the Company. You agree to pay to us within ten (10) days after the effective date of termination or expiration (without renewal) of this Agreement such royalty fees, marketing fund contributions, service charges due us on any of the foregoing and all other amounts owed to us and our affiliates which are then unpaid. You must furnish a complete accounting of all such amounts owed to us and our affiliates with the payment.
- 10.6 Interest on Late Payments. To encourage prompt payment of all amounts due to us and to cover the costs and expenses involved in handling and processing late payments, you will pay a late payment charge equal to the greater of (i) One Hundred Fifty Dollars ($150.00) or (ii) one and one-half percent (1 ½%) per month on all payments due to us during the period of time said payments are due and unpaid, but no more than the highest interest rate permitted by law. (You acknowledge that the inclusion of this Paragraph in this Agreement does not mean we agree to accept or condone late payments, nor does it indicate that we have any intention to extend credit to, or otherwise finance your operation of the Papa Ray's Pizza Restaurant.) We shall have the right to transfer from your bank account designated for making payments to us in the amount of any interest due and owing under this Paragraph. In addition, you will pay us any and all service charges we incur for each rejected electronic transfer or if you submit to us a check that is not honored and/or returned for insufficient funds.
- 10.7 Application of Payments. When we receive a payment from you, we have the right in our sole discretion to apply it as we see fit to any past due indebtedness of yours due to us or our affiliates, whether for royalties, Marketing Fund contributions, purchases, interest, or for any other reason, regardless of how you may designate a particular payment to be applied.
18.5 Costs and Attorneys' Fees. If a claim for amounts owed by you to us or our affiliates is asserted in any legal proceeding before an arbitrator, or if we are required to enforce this Agreement in a judicial or arbitration proceeding, we will be entitled to reimbursement of our costs and expenses, including reasonable accounting and legal fees, arbitration administrative charges, arbitrator's compensation, and any other related costs, whether incurred prior to, in preparation for or in contemplation of the filing of any written demand, claim, action, hearing or proceeding to enforce the obligations of this Agreement.
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, there are no explicit exceptions to the requirement that a franchisee or assignee must pay all amounts owed to Aw. Several clauses in the franchise agreement emphasize the franchisee's obligation to pay all due amounts. Specifically, before an assignment can be approved, the franchisee must have paid all royalty fees, marketing fund contributions, amounts for purchases, and any other amounts owed to Aw or its affiliates.
Furthermore, upon termination or expiration of the franchise agreement, the franchisee is obligated to pay all royalty fees, marketing fund contributions, service charges, and any other amounts owed to Aw and its affiliates within ten days of termination or expiration. To encourage timely payments, Aw charges a late payment fee equal to the greater of $150 or 1.5% per month on all overdue payments, not exceeding the highest interest rate permitted by law. Aw also has the right to apply any payment received from the franchisee to any past due indebtedness, regardless of how the franchisee designates the payment.
In the event of legal proceedings to recover amounts owed, Aw is entitled to reimbursement of costs and expenses, including accounting and legal fees. These provisions collectively reinforce the franchisee's financial obligations to Aw and highlight the importance of adhering to the payment terms outlined in the franchise agreement. While the FDD does not explicitly state exceptions, prospective franchisees should clarify with Aw under what specific circumstances, if any, a payment might be deferred or adjusted.