What is the exception to the abandonment clause for Aplus franchisees?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
Further, and only in the event of Franchisee or any Owner's default of this Agreement which has led to premature termination of this Agreement, Franchisee, each Personal Guarantor, and any Owner, shall not own an interest in, invest in, manage, operate, or perform services, consult with, or be employed by or for any Competitive Business located within 20 miles of the Franchised Business or any other APLUS store, for two years after termination or expiration of this Agreement; a Competitive Business that is owned by Franchisee or an affiliate at the time of the termination is excepted from this restriction. The two-year period shall be tolled during any event of non-compliance.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, there is a specific exception to the non-compete clause that applies after the termination of the franchise agreement. This exception pertains to situations where the agreement is prematurely terminated due to the franchisee's default.
Specifically, the standard restriction prevents a franchisee from owning an interest in, investing in, managing, operating, or working for a competing business within 20 miles of the Aplus store for two years after the agreement ends. However, this restriction does not apply to a Competitive Business that the franchisee or an affiliate already owned at the time of the termination.
In practical terms, this means that if an Aplus franchisee already owns a competing business before the Aplus franchise agreement is terminated due to their default, they are not forced to divest or cease operating that pre-existing business. This exception provides a degree of protection for franchisees who may have diversified business interests prior to entering into the Aplus franchise agreement.