What is the geographic limit of the non-competition covenant for Aplus franchisees after termination or expiration of the franchise agreement?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or other agreement | Summary | |
|---|---|---|---|
| q. | Non-competition covenants during the term of the franchise | No provision | There is no covenant by either party not to compete. |
| r. | Non-competition covenants after the franchise is terminated or expires | APLUS - 7 | In the event you or any owner is in default which has led to premature termination of the franchise agreement, you and any owner are prohibited from owning an interest in, investing in, managing, operating, or performing services, consulting with, or be employed by or for any competitive business located within 20 miles of your APLUS Store or any other APLUS Store, for two years after termination or expiration of the franchise agreement. Excepted from this restriction are any competitive businesses owned by you or an affiliate at the time of termination of the franchise agreement. |
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, the non-competition covenant after the franchise is terminated or expires restricts the franchisee and any owner. Specifically, if the termination is due to the franchisee's default, the franchisee and any owner are prohibited from involvement with any competitive business. This includes owning, investing in, managing, operating, performing services for, consulting with, or being employed by a competitive business.
The geographic scope of this restriction extends to businesses located within 20 miles of the franchisee's Aplus store or any other Aplus store. This restriction lasts for two years following the termination or expiration of the franchise agreement.
However, there is an exception: the non-compete does not apply to competitive businesses that the franchisee or an affiliate already owned at the time the franchise agreement was terminated. This means a franchisee can continue operating a pre-existing competitive business, but cannot start a new one within the restricted area and time frame after termination if the termination was due to franchisee default.