What is the duration of the non-competition covenant for Aplus franchisees after termination or expiration of the franchise agreement?

According to Aplus's 2024 Franchise Disclosure Document, a non-competition covenant applies to franchisees after the termination or expiration of the franchise agreement. Specifically, if a franchisee or any owner is in default, leading to premature termination, they are prohibited from owning an interest in, investing in, managing, operating, or being employed by any competitive business. This restriction extends to businesses located within 20 miles of the franchisee's Aplus store or any other Aplus store.

The duration of this non-competition covenant is two years following the termination or expiration of the franchise agreement. This means that for a period of two years, the franchisee cannot be involved in a competing business within the specified geographic area. This restriction aims to protect Aplus's market share and brand reputation by preventing former franchisees from using their knowledge of the Aplus system to benefit a competitor.

However, there is an exception to this non-competition covenant. The restriction does not apply to any competitive businesses that the franchisee or an affiliate already owned at the time the franchise agreement was terminated. This exception acknowledges that franchisees may have pre-existing business interests that should not be unduly restricted by the non-competition agreement. Prospective franchisees should carefully consider the implications of this non-competition covenant, especially if they have existing business interests or anticipate wanting to engage in similar businesses after the franchise agreement ends.