What happens to the non-compete obligations described in Section 6 of the Aplus Development Agreement during any period of noncompliance?

According to Aplus's 2024 Franchise Disclosure Document, the non-compete obligations outlined in Section 6 of the Development Agreement are tolled during any period of noncompliance. This means that the clock stops running on the two-year non-compete period while the franchisee is not adhering to the terms of the agreement. Additionally, the non-compete does not apply to any Competitive Business already open to the public when the Development Agreement expires or terminates.

For a prospective Aplus franchisee, this tolling provision means that any violation of the non-compete agreement effectively extends the duration of the restriction. If a franchisee breaches the non-compete terms, the two-year countdown pauses, and only resumes once the franchisee returns to compliance. This could significantly prolong the period during which the franchisee is restricted from engaging in competitive business activities after leaving the Aplus system.

It is important to note the exclusion for Competitive Businesses already operating when the agreement ends. This clause protects former Aplus franchisees who may have pre-existing business interests before entering the franchise agreement. However, any new competitive ventures started after the agreement terminates, and during the non-compete period, would still be subject to the restrictions, with the tolling provision potentially extending the duration of those restrictions if non-compliance occurs.