Can an Aplus franchisee offset, credit, or deduct from the Royalty Fee?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
roved APLUS Store from the approved location and no other business unless otherwise authorized pursuant to this Agreement or approved by us in writing.
3. FEES
3.1. Franchise Fee
Upon execution of this Agreement, Franchisee shall pay a fee ("Franchise Fee") to Franchisor in the amount stated on Summary Page. The Franchise Fee shall be deemed fully earned upon execution of this Agreement and is non-refundable, unless otherwise described herein.
3.2. Royalty Fee
Franchisee shall pay to Franchisor without offset, credit, or deduction of any nature, a fee ("Royalty Fee") in the amount stated and in compliance with the timeframe described on Attachment 1. The Franchisor requires Franchisee to pay Royalty Fees through electronic transfer as set forth in Section 3.7, which shall be submitted to Franchisor through a method that Franchisor approves.
3.3. Minimum Monthly Royalty Fee
If the Royalty Fee paid to Franchisor is less than the respective minimum monthly royalty fee ("Minimum Monthly Royalty Fee") as described in Attachment 1, then Franchisee shall pay to Franchisor the difference between monthly Royalty Fee and the respective Minimum Monthly Royalty Fee, payable at the same time and in the same manner as the Royalty Fee.
3.4.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, franchisees are required to pay royalty fees to Aplus without any reductions. Specifically, the franchisee must pay the royalty fee "without offset, credit, or deduction of any nature." This means that an Aplus franchisee cannot deduct any expenses, credits, or other amounts from the royalty fee owed to Aplus. The royalty fee amount and payment timeframe are detailed in Attachment 1 of the Franchise Agreement. Aplus requires franchisees to pay Royalty Fees through electronic transfer as set forth in Section 3.7, which shall be submitted to Franchisor through a method that Franchisor approves.
Furthermore, if the royalty fee paid is less than the minimum monthly royalty fee, the franchisee must pay Aplus the difference between the monthly royalty fee and the minimum monthly royalty fee. This payment is due at the same time and in the same manner as the regular royalty fee. This ensures Aplus receives at least the minimum amount, regardless of the franchisee's sales performance in a given month.
Failure to remit the royalty fee as required can result in interest charges. The FDD states that all royalty fees and any other amounts not received by Aplus on the due date will be subject to interest charges at the highest rate allowed by applicable state law. Interest accrues from the date payment was due until it is received in full. Additionally, the franchisee is responsible for covering all costs Aplus incurs in collecting any unpaid and past due amounts, including reasonable collection or attorney fees. This underscores the importance of timely royalty fee payments to avoid additional financial burdens.