After ceasing to be an Owner, what is the duration of the non-compete period related to Aplus stores?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
For a two-year period after I cease to be an Owner (or two years after termination or expiration of the Development Agreement, whichever occurs first) and if I am in default of the Development Agreement, I will not:
(a) Divert or attempt to divert any present or prospective customer of the APLUS Store to any competitor or do anything to harm the goodwill associated with the Marks and the System; or
(b) Own, maintain, advise, operate, engage in, be employed by, make loans to, invest in, provide any assistance to, or have any interest in (as owner or otherwise) or relationship or association with any Competitive Business, and (a) is, or is intended to be, located within the former Development Area; or (b) within a 25-mile radius of any APLUS Store in existence or under development at the time of such expiration, termination or transfer.
The obligations described in this Section 6 shall be tolled during any period of noncompliance and shall exclude any Competitive Business already open for business to the public at the time of expiration or termination of the Development Agreement.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, a two-year non-compete period applies to individuals after they cease to be an Owner, or two years after the termination or expiration of the Development Agreement, whichever occurs first, provided they are in default of the Development Agreement. During this period, the former Owner is restricted from engaging in activities that could harm the goodwill of Aplus, such as diverting customers to competitors.
Specifically, the non-compete clause prevents the individual from owning, maintaining, advising, operating, being employed by, making loans to, investing in, providing assistance to, or having any interest in any Competitive Business. This restriction applies if the Competitive Business is located within the former Development Area or within a 25-mile radius of any existing or developing Aplus store at the time of termination, expiration, or transfer.
It is important to note that any Competitive Business already open to the public at the time of the Development Agreement's expiration or termination is excluded from these restrictions. Additionally, the duration of the non-compete obligations is suspended during any period of noncompliance. This means that if the former Owner violates the non-compete agreement, the two-year period may be extended by the length of the violation.