Structure of the Fund
The source of income for the A&W Revenue Royalties Income Fund (the Fund) is through its ownership in A&W Trade Marks Inc. (Trade Marks)
which is the general partner with a 99.9% interest in A&W Trade Marks Limited Partnership (the Partnership). The Partnership owns the A&W trade-marks and licences these trade-marks to A&W Food Services of Canada Inc. (A&W Food Services) for use in operating
and franchising A&W restaurants. In return, A&W Food Services pays the Partnership a top-line royalty of 3% of sales from A&W restaurants
in the Royalty Pool.
A&W Food Services continues to build and develop the A&W trade-marks and open new restaurants. Each year, the Royalty Pool is adjusted to
include the future royalty streams from new restaurants, net of the sales of any A&W restaurants that have permanently closed.
The Partnership pays A&W Food Services for the additional royalty stream from the net new restaurants in the form of an increase in Food Services limited partnership in the Partnership.
In the event that a restaurant in the Royalty Pool closes, A&W Food Services pays the royalties that would have been paid to the Partnership
if the restaurant had not closed, until the next adjustment to the Royalty Pool.
A&W Food Services currently owns 10% of Trade Marks and has the option to convert its ownership
in Trade Marks into Units by exchanging the securities it holds for Units.
Click
here to view a diagram of the structure of the Fund.
The Fund is a top-line fund. The Fund does not operate A&W restaurants. It simply owns an investment in Trade Marks which indirectly owns
the A&W trade-marks and licences them to A&W Food Services.
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