What conditions must an Aplus franchisee meet to transfer their interest to a business entity?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
on of these facilities (which you acknowledge may be proximate to any Store developed under this Agreement).
- 8.2. Transfer by Individual Developer to Business Entity for Convenience. If you are an individual, you may transfer your interest in this Agreement to a Business Entity for convenience of operation within the first 12 months of this Agreement by signing Franchisor's standard form of assignment and assumption agreement if: (a) the Business Entity is formed solely for purposes of continuing your development rights and obligations; (b) you provide to Franchisor a copy of the Business Entity's formation and governing documents and a certificate of good standing from the jurisdiction under which the Business Entity was formed; (c) you sign a general release in favor of Franchisor and in the form Franchisor requires; and (d) you pay to Franchisor a $1,500 administrative fee.
- 8.3. Transfer Among Owners; Transfer of Non-Controlling Interest. If you are a Business Entity, your 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: (a) you have provided to Franchisor advance notice of the transfer; (b) Attachment C to this Agreement has been amended to reflect the new ownership; (c) each new Owner has signed a Guaranty and Personal Undertaking in the form of Attachment D; (d) each previous and/or new Owner has signed a general release in favor of Franchisor and in the form Franchisor requires, and (d) you pay to Franchisor a $2,500 administrative fee.
- 8.4. Transfer of Agreement; Transfer of Controlling Interest. All other transfers (including any sale or transfer of your interest in this Agreement and the sale of a Controlling Interest in you if you are a Business Entity) require Franchisor's prior written consent. Franchisor will not unreasonably withhold its consent to a transfer, but may condition its consent on satisfaction of any or all of the following:
- 8.4.1. Your 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, and Franchisor has determined, in its sole and reasonable discretion, that the terms of the sale will not materially and adversely affect the post transfer viability of any Store in operation at the time of transfer.
- 8.4.2. The transferee has demonstrated to Franchisor's satisfaction that the transferee meets Franchisor'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 Store; and has sufficient equity capital to operate each Store (which condition shall be presumed if the transferee's net worth is equal to or exceeds your net worth at the time of transfer, excluding the value of each Store);
- 8.4.3. All of your accrued monetary obligations and all other outstanding obligations to Franchisor, its Affiliates, and third party suppliers shall be up to date, fully paid and satisfied, and you must be in full compliance with this Agreement and any other agreements between you and Franchisor, its Affiliates and your suppliers;
- 8.4.4. You and each Owner has executed a general release, in a form satisfactory to Franchisor, of any and all claims against Franchisor and its Affiliates and their respective officers, directors, managers, shareholders, agents and employees in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules and ordinances; provided, however, that any release will not be inconsistent with any state law regulating franchising;
- 8.4.5. Payment of the Transfer Fee in the amount set forth in the Summary Page;
- 8.4.6.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, a franchisee may transfer their interest in the Development Agreement to a business entity within the first 12 months of the agreement under specific conditions. The business entity must be formed solely to continue the development rights and obligations outlined in the original agreement. The franchisee must provide Aplus with a copy of the business entity's formation and governing documents, along with a certificate of good standing from the relevant jurisdiction. Additionally, the franchisee is required to sign a general release in favor of Aplus, using the form that Aplus requires. Finally, the franchisee must pay Aplus a $1,500 administrative fee to complete the transfer.
If the transfer of interest occurs after the initial 12-month period or involves a sale or transfer of the agreement, or the sale of a controlling interest in the franchisee's business entity, the franchisee must obtain Aplus's prior written consent. Aplus states that it will not unreasonably withhold consent, but may require the franchisee to meet certain conditions. These conditions include submitting a written request for consent with the proposed transfer agreements at least 30 days before the transfer. Aplus must also determine that the sale terms will not negatively affect the viability of any operating Aplus store.
The potential transferee must demonstrate that they meet Aplus's current educational, managerial, and business standards, possess a good moral character, business reputation, and credit rating, and have the aptitude and ability to operate each store. The transferee must also have sufficient equity capital to operate each store, which is presumed if their net worth equals or exceeds the franchisee's net worth at the time of transfer, excluding the value of each store. All of the franchisee's accrued monetary obligations to Aplus, its affiliates, and third-party suppliers must be up to date and fully paid. The franchisee and each owner must execute a general release of claims against Aplus. The franchisee must pay the transfer fee outlined in the Summary Page of the FDD, and both the franchisee and the transferee must execute an assignment and assumption of the agreement in the form prescribed by Aplus. If the transferee is a business entity, its owners must sign Aplus's standard form of Guaranty and Personal Undertaking. The FDD specifies that any transfer made without Aplus's prior written consent will be considered void and a material breach of the agreement.