When does the two-year non-compete period for an Aw franchisee begin after the agreement's assignment, termination, or expiration?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
- 17.1 Covenant Not To Compete. Upon assignment, termination or expiration (without renewal) of this Agreement, you (and your Owners) agree that for a period of two (2) years, commencing on the effective date of assignment, termination or expiration, or the date on which you begin complying with the covenants herein, whichever is later, you (and your Owners) will not:
- (a) have any direct or indirect interest as an owner, investor, partner, director, officer, employee, consultant, representative or agent, or in any other capacity, in (a) any restaurant business selling products or services substantially similar to a Papa Ray's Pizza Restaurant concept then being offered by us (except other Papa Ray's Pizza Restaurants you are operating pursuant to franchise agreements with us), which is located (i) within ten (10) miles of the Premises of your Papa Ray's Pizza Restaurant or (i) within ten (10) miles of the premises of any other Papa Ray's Pizza Restaurant,
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, the two-year non-compete period begins either on the effective date of the franchise agreement's assignment, termination, or expiration, OR on the date the franchisee begins complying with the non-compete covenants, whichever is later. This means that Aw franchisees are restricted from engaging in competitive business activities for two years after their franchise agreement concludes, whether through assignment, termination, or expiration.
This post-term covenant not to compete prevents a former Aw franchisee from leveraging the knowledge and experience gained during their franchise term to directly compete with Aw. The restriction applies to the franchisee and their owners, ensuring that they cannot participate in any business that sells products or services substantially similar to Aw's Papa Ray's Pizza Restaurant concept.
The non-compete has geographic limitations. The restriction applies to any competitive restaurant business located within ten miles of the former franchisee's Papa Ray's Pizza Restaurant or within ten miles of any other Papa Ray's Pizza Restaurant. This protects both Aw and its existing franchisees from direct competition from former franchisees within a defined radius. Franchisees should carefully consider these restrictions and their implications for future business ventures after leaving the Aw system.