Are there any instances where Aw is expressly obligated to reasonably approve or not unreasonably withhold approval in the franchise agreement?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
t a concurrent transfer of this Agreement and the franchise rights granted hereunder to the same transferee. Any such assignment or transfer without our prior written approval will constitute a breach of this Agreement and will convey no rights to or interests in the franchise, the franchisee entity, your Papa Ray's Pizza Restaurant or its assets.
- 14.3 Conditions for Approval of Assignment. If you (and your Owners) are in compliance with this Agreement, we will not unreasonably withhold our approval of an assignment, provided that the proposed assignee is, in our opinion, of good moral character and has sufficient business experience, aptitude and financial resources to own and operate a Pap Ray's Restaurant, does not have any conflicting interests unacceptable to us, and otherwise meets our then applicable standards for franchisees. In addition the following conditions must be met prior to, or concurrently with, the effective date of the assignment:
- (a) all obligations of you and your Owners incurred in connection with this Agreement have been assumed by the assignee and, as applicable, its owners;
- (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;
- (c) the assignee completes the initial training program required of new franchisees to our satisfaction;
- (d) if required, the lessor of the Premises has consented to your assignment or sublease of the Premises to the proposed assignee;
- (e) the assignee (and, if an entity, its direct or indirect owners) have, at our option, executed and agreed to be bound by either: (a) the form of franchise agreement, owner guarantees and such other ancillary agreements as are then customarily used by us in the grant of franchises for a Papa Ray's Pizza Restaurant, which may provide for royalty fees, marketing fund contributions and other fees and terms and conditions that differ from those contained in this Agreement; or (b) an assignment and assumption agreement satisfactory to us whereby the assignee assumes your obligations under this Agreement;
- (f) You or the assignee must have paid us a transfer fee of Nine Thousand Dollars ($9,000.00). In the event the assignee is an existing franchisee that we have approved for an additional franchise, the transfer fee shall be Five Thousand Dollars ($5,000.00);
- (g) except to the extent limited or prohibited by applicable law, you (and each of your Owners) must have executed a general release, in form satisfactory to us, of any and all claims against us and our affiliates, officers, directors, employees and agents;
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw is sometimes expressly obligated to reasonably approve or not unreasonably withhold approval of a franchisee's actions or requests. Specifically, Aw will not unreasonably withhold approval of an assignment of the franchise agreement if the franchisee and their owners are in compliance with the agreement. However, this is contingent on the proposed assignee meeting certain conditions.
The conditions that the proposed assignee must meet include being of good moral character, possessing sufficient business experience, aptitude, and financial resources to operate a Papa Ray's Restaurant, not having any conflicting interests unacceptable to Aw, and meeting Aw's then-applicable standards for franchisees. Additionally, the assignee must assume all obligations of the franchisee and their owners, pay any outstanding amounts owed to Aw or its affiliates, complete the initial training program to Aw's satisfaction, and obtain the lessor's consent to the assignment or sublease of the premises, if required.
The assignee (and their owners, if an entity) must also execute and agree to be bound by either Aw's current form of franchise agreement or an assignment and assumption agreement satisfactory to Aw. A transfer fee is also required, which is Nine Thousand Dollars ($9,000.00), but if the assignee is an existing franchisee approved for an additional franchise, the transfer fee is Five Thousand Dollars ($5,000.00). These conditions ensure that the assignee is qualified and financially capable of operating the franchise, protecting Aw's interests and brand standards.
Furthermore, the franchise agreement states that except where Aw is expressly obligated to reasonably approve or not unreasonably withhold approval, Aw has the absolute right to refuse any request or withhold approval of any action or omission by the franchisee. This clause emphasizes Aw's discretion in many aspects of the franchise relationship, except in specific instances like the assignment of the franchise agreement under the conditions mentioned above. This is a fairly typical clause in franchise agreements, as it allows the franchisor to maintain control over the brand and protect its interests.