Under what conditions can Aw exercise its option to purchase a franchisee's Papa Ray's Pizza Restaurant assets?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN FRANCHISE AGREEMENT | SUMMARY |
|---|---|---|
| o. Franchisor’s option to purchase franchisee’s business | Section 16.7 | We may within 30 days of termination or expiration purchase certain assets of your Papa Ray’s Pizza Restaurant at lesser of cost or fair market value. |
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, Aw has the option to purchase certain assets of a franchisee's Papa Ray's Pizza Restaurant under specific circumstances. Aw may exercise this option within 30 days of the termination or expiration of the franchise agreement.
If Aw chooses to exercise this option, the purchase price for the assets will be the lesser of their cost or fair market value. This means a franchisee might not recoup their initial investment in assets if the fair market value has depreciated or is lower than the original cost.
This provision is important for prospective franchisees to consider, as it outlines a scenario where Aw can acquire the restaurant's assets at a potentially reduced price upon the end of the franchise term. Franchisees should carefully evaluate the implications of this clause and understand how the valuation of their assets would be determined in such a situation.