What geographic areas are restricted for an Aplus franchisee after early termination due to default, regarding involvement in a Competitive Business?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
10.1. Non-Competition After Expiration or Termination of Agreement. For a two-year period following a default that has led to early termination of this Agreement, you and any Affiliate shall not either directly or indirectly, for yourselves, or through, on behalf of, or in conjunction with any person, persons, or legal entity, own, maintain, advise, operate, engage in, be employed by, perform services for, consult with, or have any interest in, a relationship, or associate with any Competitive Business, and (a) is, or is intended to
be, located within the former Development Area; or (b) within a 25-mile radius of any APLUS Store in existence or under development at the time of such termination. Any Competitive Business that is already owned by you or your Affiliate at the time of early termination due to default is excepted from this Section 10.1. The obligations described in this Section 10.1 shall be tolled during any period of noncompliance and shall exclude any Competitive Business already open for business to the public at the time of expiration or termination of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, for a two-year period following early termination of the Franchise Agreement due to default, the franchisee and any affiliates are restricted from involvement with any Competitive Business. This restriction applies if the Competitive Business is located within the former Development Area or within a 25-mile radius of any Aplus store that exists or is under development at the time of termination.
However, there is an exception: any Competitive Business already owned by the franchisee or their affiliate at the time of early termination due to default is exempt from this restriction. Additionally, the obligations are suspended during any period of noncompliance and do not apply to any Competitive Business already open to the public when the Franchise Agreement expires or terminates.
This non-compete clause aims to protect Aplus's market and brand by preventing former franchisees from directly competing in close proximity to existing Aplus locations. Franchisees should carefully consider these restrictions, as they could significantly limit their business options if the franchise agreement is terminated early due to default. It is important to note the specific definitions of "Competitive Business" and "Affiliate" in the franchise agreement to fully understand the scope of these restrictions.