What constitutes a breach of the Aplus Franchise Agreement regarding the Guaranty and Personal Undertaking?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
- 13.6. Persons Bound.
This Agreement shall be binding on the parties and their respective successors and assigns.
As applicable, each Owner shall execute the Guaranty and Personal Undertaking attached as Attachment D.
Failure or refusal to do so shall constitute a breach of this Agreement.
You and each Owner shall be joint and severally liable for each person's obligations hereunder and under the applicable Guaranty and Personal Undertaking.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, if an owner fails or refuses to execute the Guaranty and Personal Undertaking, which is attached as Attachment D to the Franchise Agreement, it will constitute a breach of the agreement. The document specifies that each Owner, as applicable, must execute this guarantee. Furthermore, both the franchisee and each Owner are jointly and severally liable for obligations under the agreement and the Guaranty and Personal Undertaking. This means Aplus can pursue either the franchisee or the Owner individually, or both together, for any failures to meet the obligations.
This requirement ensures that Aplus has recourse against the individuals who own a beneficial interest in the franchisee entity, especially in cases where the franchisee is a corporation or LLC. The Guaranty and Personal Undertaking makes these individuals personally responsible for the franchisee's obligations, providing Aplus with an additional layer of security. This is a common practice in franchising, as it mitigates the risk associated with franchisees who may have limited assets or experience.
Prospective Aplus franchisees should carefully review Attachment D and understand the full scope of the obligations they are undertaking, as well as ensure that all applicable Owners are willing to sign the Guaranty and Personal Undertaking. Failure to comply with this requirement can have significant legal and financial consequences, potentially leading to termination of the franchise agreement and liability for damages.