Does the Aplus franchisor have any restrictions on assigning the Development Agreement?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Development Agreement | Summary | |
|---|---|---|---|
| developer which is a business entity may be offered for sale through the public offering of securities. Shares may be offered by private offering with our prior written consent. | |||
| l. | Franchisor approval of transfer by Developer | Section 8.4 | Transfers require our prior written consent, which may be withheld for any reason, in our sole subjective judgment. However, transfers that do not result in a change of control may, subject to certain conditions described in the development agreement, be completed without our prior written consent. |
| m. | Conditions for franchisor approval of transfer | Section 8.4 | You may not transfer any franchise agreement signed under the development agreement, except with our written consent and a simultaneous assignment of the development agreement and all of the franchise agreements signed under the development agreement to the same assignee. You must pay the applicable transfer fee and sign a general release. |
| n. | Franchisor's right of first refusal to acquire Developer's business | Not Applicable | Not applicable |
| o. | Franchisor's option to purchase Developer's business | Not applicable | Not applicable |
| p. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 53–64)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, Aplus places some restrictions on a developer's ability to transfer the Development Agreement.
Specifically, a developer needs to get Aplus's prior written consent before transferring the agreement. Aplus can withhold this consent for any reason, using their sole subjective judgment. However, if the transfer doesn't result in a change of control, it might be completed without Aplus's prior written consent, provided certain conditions outlined in the Development Agreement are met.
Furthermore, if a developer has franchise agreements signed under the Development Agreement, they can't transfer those franchise agreements without Aplus's written consent. In this case, the developer would need to simultaneously assign the Development Agreement and all franchise agreements signed under it to the same assignee. The developer must also pay the applicable transfer fee and sign a general release.
In the event of the death or legal incapacity of the developer (or an owner), the same transfer requirements apply. If the interest isn't transferred within six months following the death or incapacity, Aplus has the right to terminate the Development Agreement.