Who determines the disposition of the Collateral Security Deposit for an Aplus franchise?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
anchisor approves.
3.3. Minimum Monthly Royalty Fee
If the Royalty Fee paid to Franchisor is less than the respective minimum monthly royalty fee ("Minimum Monthly Royalty Fee") as described in Attachment 1, then Franchisee shall pay to Franchisor the difference between monthly Royalty Fee and the respective Minimum Monthly Royalty Fee, payable at the same time and in the same manner as the Royalty Fee.
3.4. Collateral Security Deposit
Prior to the opening of the Store, you shall deposit with us cash collateral in the amount stated in Attachment 1 ("Collateral Security Deposit"). The Collateral Security Deposit shall be held by Sunoco as one general, continuing, collateral security for the discharge and payment of the whole, or any part of any present, past, or future obligation indebtedness, or liability of you to Sunoco. You agree to enter into any additional financing statements, security agreement, or other documents deemed necessary by Sunoco. Further:
- 3.4.1. You shall pay to Sunoco a Collateral Security Deposit in an amount determined by Sunoco and no less than Ten Thousand Dollars ($10,000) or another amount stated in Attachment 1, which is due and payable prior to the opening of the APLUS Store.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, Sunoco determines the disposition of the Collateral Security Deposit. Prior to opening an Aplus store, a franchisee must deposit a Collateral Security Deposit with Sunoco, with the amount determined by Sunoco, but no less than $10,000, as security for any obligations the franchisee has to Sunoco.
Sunoco has the discretion to use the Collateral Security Deposit to cover any costs or payments the franchisee is responsible for under the lease, if the franchisee fails to meet those obligations. This means that if an Aplus franchisee doesn't pay charges or costs as required by their lease, Sunoco can use the security deposit to cover those amounts.
The amount of the Collateral Security Deposit may be changed, substituted, reduced or increased at any time by mutual agreement of Sunoco and the franchisee. This indicates that while Sunoco initially sets the deposit amount and can use it to cover the franchisee's debts, adjustments to the deposit can be made with the franchisee's agreement.