What constitutes a non-curable default under the Aplus Development Agreement?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in | Summary | |
|---|---|---|---|
| Development Agreement | |||
| a. Length of the Agreement term | Section 2.1 | The period beginning on the effective date and ending on the earlier of: (i) the date on which you have completed your development obligations, or (ii) 12:00 midnight CST on the last day specified in the development schedule. | |
| b. Renewal or extension of the | No provision | Not applicable. | |
| term | |||
| c. Requirements for Developer | No provision | Not applicable | |
| to renew or extend | |||
| d. Termination by Developer | No provision | Not applicable | |
| e. Termination by the | No provision | Not applicable | |
| franchisor without cause | |||
| f. Termination by the franchisor with “cause” | Sections 9.1, 9.2., 9.3, 9.4, 9.5, and 9.6 | We can terminate if you materially default under your development agreement, an individual franchise agreement, or any other agreement between you or your affiliate and us. In the event of the death or permanent incapacity of an owner, we may terminate if you fail to adhere to the applicable transfer requirements. | |
| g. “Cause” defined - curable defaults | Sections 9.3, 9.4, 9.5, and 9.6 | You have 10 days to cure a failure to pay fees and 30 days to cure any other default, and in the case of a breach or default in the performance of your obligations under any franchise agreement or other agreement between you and us. | |
| h. “Cause” defined – non- curable defaults | Sections 9.1 and 9.2 | Non-curable defaults: unapproved transfers; failure to meet development obligation; any breach of confidentiality or unfair competition described in Section 10; |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 53–64)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, certain defaults under the Development Agreement cannot be cured, meaning Aplus can terminate the agreement immediately without giving the developer an opportunity to fix the problem. These non-curable defaults include unapproved transfers of the agreement or ownership, failure to meet the development obligations outlined in the agreement, and any breach of confidentiality or engaging in unfair competition as described in Section 10 of the agreement.
Additionally, Aplus considers cross defaults (where a default occurs under another agreement with Aplus or its affiliates), bankruptcy, foreclosure, or insolvency as non-curable defaults. A conviction of a felony or making misrepresentations in the franchise application are also considered non-curable defaults.
Finally, Aplus considers repeated defaults, even if they were previously cured, as a non-curable default. This means that even if a developer fixes a problem, repeated occurrences of similar issues can lead to termination of the Development Agreement. This highlights the importance of maintaining consistent compliance with all aspects of the Development Agreement to avoid potential termination.