Under what conditions will Aw not unreasonably withhold approval of a franchise assignment?
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;
- (h) we must have approved the material terms and conditions of the assignment from you to the proposed assignee and must have determined that the price and terms of payment are not so
burdensome as to adversely affect the future operations of your Papa Ray's Pizza Restaurant by the assignee;
- (i) you must have entered into an agreement with us agreeing that any obligations of the assignee to make installment payments of the purchase price to you will be subordinate to the assignee's ongoing obligations to us, including, without limitation, royalty fees, marketing fund contributions, obligations for purchases from us or our affiliates and any other amounts owed to us or our affiliates.
- (j) you and or the assignee must agree to make within a time period we specify reasonable capital expenditures to upgrade, remodel, and/or redecorate the Premises so that Pap
Source: Item 22 — CONTRACTS (FDD pages 39–40)
What This Means (2025 FDD)
According to Aw's 2025 Franchise Disclosure Document, Aw will not unreasonably withhold approval of a franchise assignment if the franchisee and their owners are in compliance with the franchise agreement. The proposed assignee must be of good moral character, possess sufficient business experience, aptitude, and financial resources to operate a Papa Ray's Restaurant, and not have any conflicting interests that are unacceptable to Aw. Additionally, the assignee must meet Aw's then-applicable standards for franchisees.
Several specific conditions must also be met before or at the time the assignment takes effect. First, the assignee and their owners must assume all obligations related to the franchise agreement. Second, the franchisee must have paid all outstanding royalty fees, marketing fund contributions, purchase amounts, and any other due amounts to Aw or its affiliates. Third, the assignee must complete Aw's initial training program to their satisfaction. If required, the lessor of the premises must consent to the assignment or sublease to the proposed assignee.
Furthermore, the assignee (and their owners, if an entity) must execute and agree to be bound by either Aw's current franchise agreement, owner guarantees, and ancillary agreements, or an assignment and assumption agreement satisfactory to Aw, where the assignee assumes the franchisee's obligations. The franchisee or assignee must pay a transfer fee of $9,000, though this fee is reduced to $5,000 if the assignee is an existing franchisee approved for an additional franchise. The franchisee and their owners must also execute a general release of claims against Aw and its affiliates, officers, directors, employees, and agents, unless limited or prohibited by law.
Finally, Aw must approve the material terms and conditions of the assignment, ensuring that the price and payment terms do not adversely affect the future operations of the Papa Ray's Pizza Restaurant. The franchisee must agree that any installment payments from the assignee are subordinate to the assignee's ongoing obligations to Aw, such as royalty fees and marketing fund contributions. Lastly, the franchisee or assignee must agree to make reasonable capital expenditures to upgrade, remodel, or redecorate the premises to reflect Aw's current image standards.