What happens to the Aplus lease if the franchisee declares bankruptcy or is judicially determined to be insolvent?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
- (8) your declaration of bankruptcy or judicial determination of your insolvency; the entry by you into any arrangement with creditors or any assignment for the benefit of creditors; or the commencement of any proceeding to appoint, or the appointment of, a receiver or trustee for you or for your business or property;
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, if a franchisee declares bankruptcy or is judicially determined to be insolvent, it constitutes an event of default under the franchise agreement. This gives Aplus grounds to terminate the franchise agreement.
Beyond the termination of the agreement, the FDD stipulates further actions that Aplus can take. Specifically, upon termination or expiration of the agreement, Aplus has the option to have the franchisee assign the lease for the Aplus store to Aplus or its designee. This assignment would include the franchisee's interest in all leasehold improvements, without additional compensation to the franchisee.
If Aplus does not request assignment of the lease, the franchisee is obligated to modify the Aplus store premises within twenty days after termination or expiration of the agreement. This includes changing the color scheme and other distinctive design features to differentiate the location from other Aplus franchise locations. If the franchisee fails to de-identify the premises, Aplus has the right to enter the premises and take necessary actions to de-identify it, with the franchisee bearing the costs.