VANCOUVER, BC, Oct. 25, 2021 /CNW/ - A&W Revenue Royalties Income Fund (the "Fund") TRADING SYMBOL: (TSX: AW.UN) and A&W Food Services of Canada Inc. ("Food Services") announce that Food Services has entered into a non-binding term sheet reflecting an agreement in principle (the "Agreement") with UK-based Pret A Manger (Europe) Limited ("Pret"), which sets forth the general terms and conditions of a proposed Country Agreement with Pret that would grant Food Services master franchisor rights to Canada (the "Country Agreement").
Pursuant to the Agreement, Food Services will be granted the exclusive right to use the Pret brand in Canada for a two-year pilot (the "Trial Phase") during which Food Services will introduce the Pret brand within A&W restaurants in select markets in Canada. If the Trial Phase is successful, Food Services will be granted the exclusive right to expand the Pret brand across Canada (the "Expansion Phase") pursuant to an agreed development plan. The proposed exclusive Canadian rights to be granted to Food Services during both the Trial Phase and Expansion Phase remains subject to the negotiation and completion of the definitive Country Agreement, which is subject to Board approval.
Currently, the Fund, through its investment in A&W Trade Marks Inc. ("Trade Marks"), is entitled to receive royalties from Food Services on the sales of the 994 A&W restaurants in the royalty pool (the "Royalty"). This Royalty will also apply to the Pret products sold within A&W restaurants during the trial Phase, to the extent such restaurants are in the royalty pool. Should the Trial Phase prove successful the Royalty will also be earned by the Fund on the sales of any Pret products made within A&W restaurants thereafter.