What geographic restrictions apply to a former Aplus Owner regarding competitive businesses?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
For a two-year period after I cease to be an Owner (or two years after termination or expiration of the Development Agreement, whichever occurs first) and if I am in default of the Development Agreement, I will not:
(a) Divert or attempt to divert any present or prospective customer of the APLUS Store to any competitor or do anything to harm the goodwill associated with the Marks and the System; or
(b) Own, maintain, advise, operate, engage in, be employed by, make loans to, invest in, provide any assistance to, or have any interest in (as owner or otherwise) or relationship or association 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 expiration, termination or transfer.
The obligations described in this Section 6 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 the Development Agreement.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, there are geographic restrictions on a former Aplus Owner regarding competitive businesses. For a two-year period after ceasing to be an Owner, or two years after the termination or expiration of the Development Agreement (whichever occurs first), and if the Owner is in default of the Development Agreement, certain restrictions apply.
Specifically, the Owner cannot engage in activities that could harm the goodwill associated with the Aplus brand. They are prohibited from owning, maintaining, advising, operating, or being employed by 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 the expiration, termination, or transfer.
However, these obligations are tolled during any period of noncompliance. Also, the restrictions do not apply to any Competitive Business that was already open to the public at the time of the Development Agreement's expiration or termination. This means that if a competitive business was already operating before the end of the agreement, the former Owner is not restricted from being involved with it.
These restrictions are designed to protect Aplus's market and brand reputation by preventing former Owners from using their knowledge and resources to directly compete with existing Aplus franchises shortly after their involvement with the brand ends. Prospective franchisees should carefully consider these limitations, as they could impact future business opportunities after leaving the Aplus system.