When transferring my Aw franchise, what happens if the transferee does not sign a new agreement?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION | SUMMARY |
|---|---|---|
| IN FRANCHISE AGREEMENT | ||
| h. "Cause" defined – non-curable defaults | Section 15.1 | Failure to locate site or open Papa Ray's Pizza Restaurant in time required, failure to satisfactorily complete initial training, abandonment, cease operating for 2 or more days, material misrepresentations, conviction of a felony, dishonest or unethical conduct, unauthorized transfers, unauthorized use or disclosure of confidential information or Operations Manual, unauthorized use of Marks, having interest in competing business, creation of a threat to public health or safety not corrected within 24 hours, 3 or more defaults in any 12 month period, failure to attend training or conference 2 or more times, filing for bankruptcy relief. |
| i. Your obligations on termination/ non-renewal | Section 16 | Pay outstanding amounts, cease operating, cease using Marks, return items containing Marks, cancel fictitious names, transfer telephone number to us, return of confidential information, assign lease at our option or de identify the restaurant premises (see also o. and r. below) |
| j. | Section 14.1 | No restriction on our right to assign. |
| Assignment of contract by | ||
| franchisor. | ||
| k. "Transfer" by franchisee – definition | Section 14.2. | Includes transfer of any interest in Franchise Agreement, Papa Ray's Pizza Restaurant or a substantial portion of its assets or ownership change in franchisee. |
| l. Franchisor approval of transfer by franchisee | Sections 14.2 and 14.3 | Except for transfer to entity controlled by you, we have right to approve all transfers, but will not unreasonably withhold approval. Transfer to an entity is effective upon 30 days' notice to us once you sign our assignment agreement and all owners guaranty the franchise agreement obligations of the entity. |
| m. Conditions for franchisor approval of transfer | Section 14.3. | You have complied with Franchise Agreement during the term, all amounts due us and our affiliates are paid, transferee qualifies and completes training, lessor consents to lease assignment, transferee assumes your agreement or signs new agreement for remainder of term (at our option), transfer fee paid, general release signed by you and your owners, we approve terms of transfer and you subordinate buyer's debt to you to our interest in franchise business, and you or transferee remodel the restaurant premises (see also r below). |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 34–36)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, when transferring a franchise, the transferee may be required to sign a new agreement. Specifically, Aw has the option to require the transferee to either assume the existing agreement or sign a new agreement for the remainder of the term.
This condition is part of the broader requirements for Aw's approval of the transfer. Other conditions include that the franchisee must have complied with the Franchise Agreement during its term, all outstanding amounts due to Aw and its affiliates must be paid, the transferee must qualify and complete training, the lessor must consent to the lease assignment, a transfer fee must be paid, a general release must be signed by the franchisee and their owners, Aw must approve the terms of the transfer, the franchisee must subordinate the buyer's debt to them to Aw's interest in the franchise business, and either the franchisee or transferee must remodel the restaurant premises.
If the transferee does not sign a new agreement when required, Aw will likely not approve the transfer. This could prevent the franchisee from selling their business to the prospective buyer. It is important for a prospective Aw franchisee to understand all the conditions for transfer to ensure a smooth process if they decide to sell their franchise in the future.