What happens if an Aplus franchisee fails to timely establish, equip, and commence operations of the Franchised Business?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
- 16.2.1. The following constitute incurable defaults under the Franchise Agreement. If any of the following occur, Franchisor shall have the right to terminate this Agreement, without providing Franchisee an opportunity to cure. Termination shall be effective upon delivery of notice of termination.
- (a) Franchisee fails to timely establish, equip, and commence operations of the Franchised Business pursuant to Section 5;
Franchisee must take possession of the APLUS Store and open by the Commencement Date. If Franchisee fails take possession of and open the APLUS Store for business on the Commencement Date, in addition to any other remedies herein provided, Sunoco, at its option, shall have the right to collect, as liquidated damages and not as a penalty, the prorated Minimum Royalty Fee per day for each calendar day you fail to open the APLUS Store for business. In addition, if you fail to take possession of and open the APLUS Store for business within thirty (30) days after the Commencement Date, Sunoco may terminate this Agreement. If this Agreement is terminated pursuant to this Section 5.6, Franchisor shall retain the entire Franchise Fee paid by Franchisee. The Franchise Fee retained shall be specifically understood and agreed by the parties to be in consideration of the services provided, time expended, work performed, and other efforts of Franchisor up to the date of Franchisee's failure to timely commence operations of the Franchised Business and shall not be construed as nor considered to be a penalty.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, failure to timely establish, equip, and commence operations of the franchised business as per Section 5 of the franchise agreement constitutes an incurable default. This means Aplus can terminate the agreement immediately upon delivering a termination notice to the franchisee.
In addition to immediate termination, if the franchisee fails to take possession of and open the Aplus store by the commencement date, Sunoco (Aplus's parent company) has the option to collect a prorated minimum royalty fee per day as liquidated damages, not as a penalty, for each day the store remains unopened. If the franchisee does not take possession and open the store within 30 days after the commencement date, Aplus may terminate the franchise agreement.
If Aplus terminates the agreement due to the franchisee's failure to open on time, Aplus will retain the entire franchise fee. The FDD specifies that this retained fee is compensation for the services provided, time expended, work performed, and other efforts by Aplus up to the point of the franchisee's failure to commence operations, and it is not considered a penalty.