Are there any financial thresholds related to the location of the Papa Ray's Pizza Restaurant in the Aw Franchise Agreement?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
You agree at your own expense to do the following: (1) secure all financing required to fully develop the Papa Ray's Pizza Restaurant; (2) obtain all required building, utility, sign, and business permits and licenses and any other required permits and licenses; (3) construct the Papa Ray's Pizza Restaurant according to the construction plans and specifications we have approved; (4) decorate the Papa Ray's Pizza Restaurant in compliance with plans and specifications we have approved; (5) purchase and install all required fixtures, furniture, equipment, and signs; and (6) purchase an opening inventory of required products, and supplies.
If you are (i) an existing franchisee in good standing under your existing franchise agreements with us purchasing an additional franchise; (ii) a honorably discharged Veteran; or (iii) a current or past employee of ours, our affiliate or one of our franchisees who was so employed for a minimum of one year, you must pay us an Initial Franchise Fee of Fifteen Thousand Dollars ($15,000.00) in cash in full upon the signing of this Agreement.
You agree to pay five percent (5%) of the Gross Revenue (as defined below) of the Papa Ray's Pizza Restaurant.
You agree to contribute to the Marketing Fund two percent (2%) of the Gross Revenue (as defined below) of the Papa Ray's Pizza Restaurant.
The Protected Area granted to you will be a certain mile radius from the Premises identified in Exhibit 1.
The minimum radius that you will be granted is three (3) miles from the Premises.
The criteria for determining the boundaries of the Protected Area include the population density, demographics, the amou
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to the 2025 Aw Franchise Disclosure Document, the Franchise Agreement does not explicitly state financial thresholds related to the location of the Papa Ray's Pizza Restaurant. However, the document does state that the franchisee is responsible for securing all financing required to fully develop the Papa Ray's Pizza Restaurant. This implies that the franchisee must have sufficient financial resources to cover all costs associated with the location, including construction, permits, licenses, fixtures, furniture, equipment, signs, and initial inventory.
Additionally, the franchisee must pay an initial franchise fee, which is $15,000 for existing franchisees, honorably discharged veterans, or current/past employees of Aw or its franchisees. The franchisee must also pay a weekly royalty fee of 5% of the Gross Revenue of the Papa Ray's Pizza Restaurant, as well as a contribution to the National Marketing Fund of 2% of the Gross Revenue. These ongoing financial obligations could be affected by the location's performance.
The Franchise Agreement also mentions a Protected Area, which is a certain mile radius from the Premises identified in Exhibit 1, with a minimum radius of three miles. The criteria for determining the boundaries of the Protected Area include population density and demographics. While this doesn't represent a financial threshold, it does suggest that Aw considers the financial viability of a location when determining the protected area.
While the FDD does not specify explicit financial thresholds for location approval, prospective franchisees should inquire with Aw about the financial criteria used to evaluate potential locations and how these criteria might impact the overall financial performance of the franchise. Understanding these factors is crucial for making an informed investment decision.