Does the force majeure clause in the Aplus franchise agreement apply to payment obligations?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
No party shall be deemed in default of this Agreement for any delay or failure to fulfill any obligation (other than a payment obligation) hereunder so long as and to the extent to which any delay or
failure in the fulfillment of such obligation is prevented, frustrated, hindered or delayed as a consequence of circumstances of "Force Majeure," which shall be defined as those significant events outside the party's control, including but not limited to Acts of God (such as tornadoes, earthquakes, hurricanes, floods, fire or other natural catastrophe), war, acts of terrorism, civil unrest, government actions or regulations, national pandemic or epidemic, or any other event similar to those enumerated above; provided however, that neither an act or failure to act by a governmental authority, nor the performance, non-performance or exercise of rights under any agreement with you by any lender, landlord, or other person shall be an event of Force Majeure under this Agreement, except to the extent that such act, failure to act, performance, nonperformance or exercise of rights results from an act which is otherwise an event of Force Majeure. Your financial inability to perform or your insolvency shall not be an event of Force Majeure under this Agreement. Such excuse from liability shall be effective only to the extent and duration of the event(s) causing the failure or delay in performance and provided that the party has not caused such event(s) to occur and continues to use diligent, good faith efforts to avoid the effects of such event and to perform the obligation. A party claiming the benefit of this provision shall, as soon as reasonably practicable after the occurrence of any such event, (a) provide written notice to the other party of the nature and extent of any such Force Majeure condition; (b) use commercially reasonable efforts to remove any such causes and resume performance under this Agreement, as applicable, as soon as reasonably practicable; and (c) otherwise continue performing its obligations hereunder.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, the force majeure clause explicitly excludes payment obligations. This means that franchisees are still required to make all payments to Aplus, even if a force majeure event occurs.
The force majeure clause covers significant events outside a party's control, such as natural disasters, war, terrorism, civil unrest, government actions, pandemics, or similar events. However, the clause specifically states that it does not apply to payment obligations. Additionally, a franchisee's financial inability to perform or insolvency is not considered a force majeure event.
This exclusion of payment obligations from the force majeure clause is a standard practice in franchising. It ensures that Aplus continues to receive the necessary revenue to support the franchise system, even during times of crisis. While the franchisee may face financial hardship during a force majeure event, they are still obligated to meet their payment obligations to Aplus. Franchisees should be aware of this and factor it into their financial planning.