Does the Aplus franchisee have to provide Sunoco with security in connection with the Franchise Agreement?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
You shall not be responsible for payment of Store Facilities Rent or store facilities security deposit as long as the APlus Franchise Agreement is in effect and you are responsible for payment of the Royalty Fee thereunder.
Additional Charges
(D) If you fail to perform your obligations under this Lease, including payment of any charges or costs for which you are responsible pursuant to this Lease, Sunoco may in its discretion perform such obligations or pay such items. Such costs or payments shall be deemed additional charges that are due and payable to Sunoco within five (5) days from demand. At its option, Sunoco may also apply toward such costs and payments all or part of the Collateral Security Deposit as provided for in Section 2.04(B).
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to the 2024 Aplus Franchise Disclosure Document, franchisees are not required to provide Sunoco with a store facilities security deposit as long as the Aplus Franchise Agreement is in effect and the franchisee is responsible for the Royalty Fee. However, if the Aplus Franchise Agreement is terminated or not in effect for any reason and the Premises Lease is in effect, the franchisee is responsible for payment of Store Facilities Rent or store facilities security deposit.
If the franchisee fails to perform their obligations under the lease, including payment of any charges or costs, Sunoco may perform such obligations or pay such items. These costs or payments are deemed additional charges due and payable to Sunoco within five days of demand. Sunoco may also apply all or part of the Collateral Security Deposit towards such costs and payments as provided for in Section 2.04(B).
This means that while the franchise agreement is active and the franchisee is paying royalties, no security deposit is required. However, upon termination of the franchise agreement, a security deposit or rent becomes applicable under the premises lease. Additionally, a collateral security deposit may be used to cover any costs or payments the franchisee fails to make under the lease, providing Sunoco with a means of securing payment for franchisee obligations.