Under Section 17.1 of the Aw Franchise Agreement, do the same non-competition restrictions apply after assignment of the franchise?
Aw Franchise · 2025 FDDAnswer from 2025 FDD Document
| PROVISION | SECTION IN FRANCHISE AGREEMENT | SUMMARY |
|---|---|---|
| n. Franchisor's right of first refusal to acquire franchisee's business | Section 14.6 | We can match any offer for your business or an ownership interest in you. |
| 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. |
| p. | Section 14.4 | Franchise or ownership interest in you must be |
| Death or disability of franchisee | assigned to approved buyer within 6 months. | |
| q. Non-competition covenants during the term of the franchise | Section 9.3 | No involvement in competing business anywhere. |
| r. Non-competition covenants after the franchise is terminated or expires | Section 17.1 | No involvement in a competing business for 2 years within 20 miles of your Papa Ray's Pizza Restaurant or of any other Papa Ray's Pizza Restaurant (same restrictions apply after assignment). |
| s. Modification of the Agreement | Sections 6.2 and 19.6 | Operations Manual and standards and specifications are subject to change. No modifications to the Franchise Agreement except if in writing and signed by both parties. |
| t. Integration/merger clause | Section 19.6 | Only terms of the Franchise Agreement (including exhibits, attachments, Operations Manual and other written materials) and representations made in this Disclosure Document are binding. |
| u. Dispute resolution by arbitration or mediation | Sections 18.1 and 18.2 | Disputes must be mediated before filing an arbitration action. |
| v. | Section 18.4 | Litigation must be in Illinois; subject to state |
| Choice of forum | law. | |
| w.Choice of law | Section 18.4 | Law of the state of Illinois applies, except franchise laws only apply if you meet jurisdictional requirements, subject to state law. |
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, Section 17.1 of the Franchise Agreement outlines non-competition covenants that apply after the franchise is terminated or expires. These covenants restrict involvement in a competing business for a period of 2 years within a 20-mile radius of the franchisee's Papa Ray’s Pizza Restaurant or any other Papa Ray’s Pizza Restaurant.
The critical point is that these same non-competition restrictions also apply after assignment of the franchise. This means that if a franchisee sells or transfers their Aw franchise to a new owner, the original franchisee remains bound by the non-compete agreement under the same terms as if the franchise had been terminated or expired.
For a prospective Aw franchisee, this has significant implications. If they decide to sell their franchise, they cannot immediately open a competing pizza restaurant within 20 miles of any Aw location for two years. This restriction could limit their future business opportunities and should be carefully considered before entering into a franchise agreement with Aw.