What conditions must an Aplus franchisee meet for owners to transfer ownership interests within the business entity?

According to Aplus's 2024 Franchise Disclosure Document, if a franchisee is a business entity, the owners may transfer their ownership interests in the business entity among each other, and may transfer up to a Non-Controlling Interest in the Business Entity to one or more third parties if the following conditions are met. First, Aplus must receive advance notice of the transfer. Second, Attachment C to the Development Agreement must be amended to reflect the new ownership. Third, each new owner must sign a Guaranty and Personal Undertaking in the form of Attachment D. Fourth, each previous and/or new owner must sign a general release in favor of Aplus in the form Aplus requires. Finally, the franchisee must pay Aplus a $2,500 administrative fee. A "Non-Controlling Interest" is defined as any interest less than 51% of the corporation, limited liability company, or partnership.

For all other transfers, including any sale or transfer of the franchisee's interest in the Development Agreement and the sale of a Controlling Interest in the franchisee if the franchisee is a Business Entity, the franchisee must obtain Aplus's prior written consent. Aplus will not unreasonably withhold its consent to a transfer, but may condition its consent on satisfaction of certain conditions. These conditions include the franchisee providing a written request for consent and delivery of a copy of the proposed transfer agreements, including sale terms, at least 30 days prior to the proposed transfer. Aplus must determine, in its sole and reasonable discretion, that the terms of the sale will not materially and adversely affect the post transfer viability of any Aplus store in operation at the time of transfer.

Additional conditions include the transferee demonstrating to Aplus's satisfaction that the transferee meets Aplus's then-current educational, managerial and business standards; possesses a good moral character, business reputation and credit rating; has the aptitude and ability to operate each Aplus store; and has sufficient equity capital to operate each Aplus store. This condition is presumed if the transferee's net worth is equal to or exceeds the franchisee's net worth at the time of transfer, excluding the value of each Aplus store. All of the franchisee's accrued monetary obligations and all other outstanding obligations to Aplus, its affiliates, and third party suppliers must be up to date, fully paid and satisfied, and the franchisee must be in full compliance with the Development Agreement and any other agreements between the franchisee and Aplus, its affiliates and suppliers.

Furthermore, the franchisee and each owner must execute a general release, in a form satisfactory to Aplus, of any and all claims against Aplus and its affiliates and their respective officers, directors, managers, shareholders, agents and employees in their corporate and individual capacities, including claims arising under federal, state and local laws, rules and ordinances. The franchisee must also pay the transfer fee in the amount set forth in the Summary Page and the franchisee and the transferee must execute an assignment and assumption of the Development Agreement in the form prescribed by Aplus. If the transferee is a Business Entity, then the transferee's Owners each must sign Aplus's standard form of Guaranty and Personal Undertaking. These conditions ensure that Aplus maintains control over who becomes a franchisee and that the financial and operational standards of the franchise system are upheld.