What constitutes a default under the Aplus franchise agreement regarding foreclosure proceedings against the Franchised Location?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
ansferee are parties, by the transferee.
9. DEFAULT AND TERMINATION
9.1. Termination In the Event of Bankruptcy or Insolvency. You shall be deemed to be in default under this Agreement, and all rights granted to you in this Agreement shall automatically terminate without notice, if you become insolvent or make a general assignment for the benefit of creditors; if a petition in bankruptcy is filed by you or such a petition is filed against you and you do not oppose it; if you are adjudicated as bankrupt or insolvent; if a bill in equity or other proceeding for the appointment of a receiver for you or other custodian for your business or assets is filed and consented to by you; if a receiver or other custodian (permanent or temporary) of your assets or property, or any part thereof, is appointed by any court of
competent jurisdiction; if proceedings for a composition with creditors under any state or federal law is instituted by or against you; if a final judgment remains unsatisfied or of record for 30 days or longer (unless a supersedeas bond is filed); if you are dissolved; if execution is levied against your business or property; if judicial, non-judicial or administrative proceedings to foreclose any lien or mortgage against any Franchised Location premises or assets or equipment is instituted against you and not dismissed within 30 days;
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, a franchisee is considered in default if judicial, non-judicial, or administrative proceedings to foreclose any lien or mortgage against any Franchised Location premises, assets, or equipment are instituted against them and are not dismissed within 30 days.
This means that if a franchisee faces foreclosure proceedings related to their Aplus location and these proceedings are not dismissed within 30 days, Aplus has grounds to declare the franchisee in default of the franchise agreement. This could lead to termination of the agreement and loss of the franchise.
It is important for prospective Aplus franchisees to understand this clause, as it highlights the importance of maintaining financial stability and addressing any potential foreclosure issues promptly. The 30-day window to resolve such proceedings is relatively short, emphasizing the need for franchisees to seek legal and financial advice immediately if they encounter such a situation.