How is the final payment calculated for an Aplus franchise upon expiration or termination of the Franchise Agreement?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
17.2.1. Within thirty (30) days following expiration or termination of this Agreement, Franchisee shall pay to Franchisor a final payment ("Final Payment") in an amount calculated as the product of Franchisee's Accounts Receivable (defined below), multiplied by seventy percent (70%), multiplied by nine percent (9%). Such amount is payable in lieu of the Royalty Fees and Marketing Fees that would
otherwise be payable on Gross Revenue after the date of expiration or termination and is not in lieu of any Liquidated Damages for early termination or breach of the Franchise Agreement. The parties acknowledge and agree that the Final Payment represents a reasonable estimation of future Gross Revenue on Franchisee's accounts receivable, and is not a penalty. "Accounts Receivable" for purposes of this provision means amounts due Franchisee for services performed prior to expiration or termination.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, a final payment is required from the franchisee upon the expiration or termination of the franchise agreement. This final payment is calculated based on the franchisee's accounts receivable, which are defined as the amounts due to the franchisee for services performed before the expiration or termination date.
The calculation involves multiplying the franchisee's Accounts Receivable by 70%, and then multiplying the result by 9%. This final amount is what the franchisee must pay to Aplus. This payment is specifically in place of the ongoing Royalty Fees and Marketing Fees that would typically be due on gross revenue after the agreement's expiration or termination.
The FDD emphasizes that this final payment is not a substitute for any liquidated damages that might be assessed for early termination or breach of the franchise agreement. Aplus states that the final payment represents a reasonable estimation of future gross revenue on the franchisee's accounts receivable and is not considered a penalty.