What damages does Aplus claim to suffer if a franchisee terminates the agreement without cause before the expiration date?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
If, prior to the Expiration Date, Franchisee terminates this Agreement without cause, or if Franchisor terminates this Agreement on account of Franchisee's material default hereof pursuant to Sections 16.1 or 16.2, the parties acknowledge and agree that Franchisor will suffer damages for the loss of the benefit bargained for in this Agreement and irreparable damage to the integrity of the franchise system. As partial compensation for these damages Franchisor shall be entitled to collect from Franchisee,
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, if a franchisee terminates the agreement without cause before the expiration date, Aplus states that it will suffer damages for the loss of the benefit bargained for in the agreement and irreparable damage to the integrity of the franchise system. As partial compensation for these damages, Aplus is entitled to collect from the franchisee. The FDD does not specify the exact method for calculating these damages.
This clause means that an Aplus franchisee who breaches the agreement by terminating early may face significant financial penalties. The franchisor asserts its right to compensation for lost future royalties and the potential harm to the Aplus brand caused by the premature closure.
Prospective franchisees should seek clarification from Aplus regarding how these damages are calculated. Understanding the potential financial implications of early termination is crucial before signing the franchise agreement. It is also advisable to consult with a franchise attorney to fully understand the franchisee's rights and obligations under the agreement.