Does the Aplus franchise agreement consider defaults under agreements with Affiliates as grounds for termination?

According to Aplus's 2024 Franchise Disclosure Document, a default under any agreement between the franchisee or their affiliate and Aplus or its affiliate can be grounds for termination of the franchise agreement. Specifically, the FDD mentions "cross defaults" as a cause for termination. This means that if the franchisee or an affiliated entity fails to meet their obligations under any agreement with Aplus or its affiliates, Aplus has the right to terminate the franchise agreement.

This provision is significant for prospective Aplus franchisees because it broadens the scope of potential defaults beyond just the franchise agreement itself. It includes any agreement with Aplus or its affiliates, creating a wider net of potential violations that could lead to termination. Franchisees need to be aware of all agreements they or their affiliates have with Aplus to avoid inadvertently triggering a default.

It is important for potential Aplus franchisees to carefully review all agreements and understand their obligations to Aplus and its affiliates. This includes understanding the definition of "affiliate" in the franchise agreement, as it determines the scope of entities whose defaults could impact the franchise. Franchisees should also seek legal counsel to fully understand the implications of cross-default provisions and ensure they can comply with all requirements to avoid termination of their Aplus franchise.

Furthermore, the Aplus FDD specifies that such defaults are non-curable. This means that Aplus does not have to provide an opportunity to correct the default before terminating the agreement. This makes it even more critical for franchisees to proactively manage their obligations and maintain compliance across all agreements with Aplus and its affiliates.