What happens to the Aplus Development Agreement if the Developer's interest is not transferred within six months of death or legal incapacity?
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. | Death or disability of Developer | Section 8.9 | Same requirements as for a transfer in "m" above. If your interest is not transferred within six months following your (or an Owner's) death or legal incapacity, your development agreement may be terminated. |
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, if the developer's interest is not transferred within six months following their death or legal incapacity (or an Owner's), the development agreement may be terminated.
This provision in the Aplus development agreement is important for prospective developers to consider. It means that if a developer dies or becomes legally incapacitated, their interest in the development agreement must be transferred within six months. If the transfer does not occur within this timeframe, Aplus has the right to terminate the agreement.
This could have significant implications for the developer's estate or family, as they could lose the opportunity to continue developing Aplus stores in the designated area. It is crucial for developers to have a succession plan in place to ensure a smooth transfer of their interest in the event of death or legal incapacity. Developers should consult with legal and financial advisors to understand the implications of this provision and to develop a plan that protects their interests.