What happens if an Aplus franchisee or owner has outstanding judgments against them for more than 30 days?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in | Summary | |
|---|---|---|---|
| Development Agreement | |||
| a. Length of the Agreement term | Section 2.1 | The period beginning on the effective date and ending on the earlier of: (i) the date on which you have completed your development obligations, or (ii) 12:00 midnight CST on the last day specified in the development schedule. | |
| b. Renewal or extension of the | No provision | Not applicable. | |
| term | |||
| c. Requirements for Developer | No provision | Not applicable | |
| to renew or extend | |||
| d. Termination by Developer | No provision | Not applicable | |
| e. Termination by the | No provision | Not applicable | |
| franchisor without cause | |||
| f. Termination by the franchisor with “cause” | Sections 9.1, 9.2., 9.3, 9.4, 9.5, and 9.6 | We can terminate if you materially default under your development agreement, an individual franchise agreement, or any other agreement between you or your affiliate and us. In the event of the death or permanent incapacity of an owner, we may terminate if you fail to adhere to the applicable transfer requirements. | |
| g. “Cause” defined - curable defaults | Sections 9.3, 9.4, 9.5, and 9.6 | You have 10 days to cure a failure to pay fees and 30 days to cure any other default, and in the case of a breach or default in the performance of your obligations under any franchise agreement or other agreement between you and us. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 53–64)
What This Means (2024 FDD)
Based on the 2024 Aplus Franchise Disclosure Document, if a franchisee or any owner of an Aplus franchise has outstanding judgments against them for more than 30 days, this constitutes a curable default under the development agreement. Aplus can terminate the franchise agreement if the franchisee fails to cure the default within the specified timeframe.
Specifically, the franchisee has 30 days to resolve the outstanding judgments. This cure period provides an opportunity for the franchisee to address the financial issues and prevent termination of the franchise agreement. The franchisor's ability to terminate is contingent on the franchisee's failure to rectify the situation within this period.
This provision is fairly standard in franchising, as franchisors need to protect their brand and the financial health of the entire franchise system. Unresolved judgments can indicate financial instability, which could negatively impact the Aplus brand's reputation and the performance of the specific franchise location. Franchisees should maintain good financial standing to avoid such defaults and potential termination.