Besides the conditions outlined in this section, under what other sections of the Aplus lease agreement might the Collateral Security Deposit not be refunded upon termination?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
- 3.4.6.
You authorize Sunoco to apply the collateral security to the payment of any obligation indebtedness, liability or tax outstanding of you to Sunoco, or for which Sunoco may become liable at any time during or at the end of any relationship with you.
Sunoco shall have the right to purchase any or all of the property to be sold at either public or private sale, free from any right of redemption on the part of you.
- 3.4.7.
Sunoco shall be the sole determiner of the disposition of said Collateral Security Deposit.
Sunoco's deposit of said Collateral Security Deposit shall not release you of any obligations contained in this Agreement.
Should Sunoco use the Collateral Security Deposit, Sunoco may require changes in credit terms, if any, with you.
- 3.4.8.
In the event you are in default at any time in the performance of any of the terms and conditions of this Agreement, Sunoco shall have the right, but not the obligation (in addition to any other remedies it has or may possess either at law, in equity, or under the terms of this Agreement) to correct said default and to deduct any resulting costs or expense incurred from your Collateral Security Deposit.
- 3.4.9.
If a deduction is made pursuant to Section 3.4.8 above, you shall, immediately upon notice from Sunoco, pay to Sunoco the amount necessary to restore the Collateral Security Deposit to the full amount as set forth in this Section 3.4.
- 3.4.10.
Sunoco agrees to return to you the Collateral Security Deposit, less any amount deducted for costs incurred by Sunoco because of default by you, indebtedness and liabilities due and payable to Sunoco by you, or because of willful or malicious physical damage to the Premises, Store or Store Equipment, after the termination, nonrenewal or expiration of this Agreement.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, there are several circumstances outlined in the lease agreement, outside of Section 3.4.10, where the Collateral Security Deposit may not be fully refunded to the franchisee upon termination. Specifically, Section 3.4.6 states that Sunoco is authorized to use the collateral security for the payment of any obligation, indebtedness, liability, or tax outstanding from the franchisee to Sunoco at any time during or at the end of their relationship. This means that if the franchisee has any outstanding financial obligations to Aplus, these can be deducted from the security deposit.
Additionally, Section 3.4.8 allows Aplus to deduct costs or expenses incurred from the franchisee's Collateral Security Deposit if the franchisee defaults on any terms and conditions of the agreement, and Aplus has to correct the default. Section 3.4.10 also mentions deductions for costs incurred by Sunoco because of default by you, indebtedness and liabilities due and payable to Sunoco by you, or because of willful or malicious physical damage to the Premises, Store or Store Equipment. These provisions give Aplus broad discretion to use the security deposit to cover various types of financial liabilities or damages caused by the franchisee.
In practical terms, this means that an Aplus franchisee needs to be diligent in meeting all financial obligations and maintaining the premises to avoid deductions from the Collateral Security Deposit. It also highlights the importance of understanding all the terms and conditions of the lease agreement to minimize the risk of incurring costs that could be charged against the deposit. The franchisee should also be aware that Aplus has the sole discretion in determining the disposition of the Collateral Security Deposit, as stated in Section 3.4.7, which could potentially lead to disputes over deductions.