What costs and expenses can the Aplus Franchisor reimburse itself for when reviewing a proposed offering?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
For each proposed offering, you shall pay to Franchisor a retainer in an amount determined by Franchisor, which Franchisor shall use to reimburse itself for the reasonable costs and expenses it incurs (including, without limitation, attorneys' fees and accountants' fees) in connection with reviewing the proposed offering.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, if a franchisee proposes an offering, they must provide Aplus with a copy of all offering materials for review at least 60 days before filing with any government agency or distributing them to investors. Aplus's review is limited to ensuring compliance with the franchise agreement terms and may require an indemnity agreement.
For each proposed offering, Aplus requires the franchisee to pay a retainer. Aplus will then use this retainer to reimburse itself for reasonable costs and expenses incurred while reviewing the offering. These costs and expenses include, but are not limited to, attorney's fees and accountant's fees.
This means that a franchisee seeking to raise capital through an offering will need to budget for these legal and accounting review costs charged by Aplus, in addition to their own offering expenses. The amount of the retainer is determined by Aplus, so prospective franchisees should inquire about the typical range of these retainers to accurately forecast their potential expenses.