What happens to all rights granted to the Aplus franchisee under the agreement upon termination or expiration?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
f the Franchised Business, the Management Fee shall be payable to Franchisor within seven (7) days of invoice. You shall indemnify and hold harmless Franchisor from any and all claims arising from the alleged acts and omissions of Franchisor and its representatives, pursuant to Section 21 below. Franchisor shall have the uninhibited right to choose its designee, who may be Franchisor's affiliate or another franchisee, without approval from Franchisee.
17. RIGHTS AND DUTIES UPON EXPIRATION OR TERMINATION
17.1. Actions to be Taken
Except as otherwise provided herein, upon termination or expiration, this Agreement and all rights granted hereunder to Franchisee shall terminate and Franchisee shall:
- 17.1.1. Immediately cease to operate the Franchised Business and shall not thereafter, directly or indirectly, represent to the public or hold itself out as a present or former franchisee of Franchisor;
- 17.1.2. Cease to use the Trade Secrets or other Confidential Information, the System and the Marks including, without limitation, all slogans, symbols, logos, advertising materials, stationery, forms and any other items which display or are associated with the Marks;
- 17.1.3. Take such action as may be necessary to cancel or assign to Franchisor, at Franchisor's option, any assumed name or equivalent registration filed with state, city or county authorities which contains the name APLUS or any other Mark, and Franchisee shall furnish Franchisor with evidence satisfactory to Franchisor of compliance with this obligation within thirty (30) days after termination or expiration of this Agreement;
- 17.1.4. Pay all sums owing to Franchisor and any Affiliate, including amounts due under Section 17.2, below. In the event of termination for any default of Franchisee, such sums shall include, but not be limited to, all damages, costs and expenses, including reasonable attorneys' fees, with respect to litigation, arbitration, appellate or bankruptcy proceedings, unpaid Royalty Fees, and any other amounts due to Franchisor or any Affiliate;
Prior to the termination of the Agreement, if the Franchisee fails to pay any amounts owed to the Franchisor or its affiliates, fails to comply with any term of this Agreement or notify the Franchisor that the Franchised Business is closing, then in addition to the Franchisor's right to terminate this Agreement or to bring a claim for damages, the Franchisor has the option to:
- (a) Remove the listing of the Franchised Business from all advertising published or approved by the Franchisor;
- (b) Cease listing the Franchised Business on any technology platforms;
- (c) Prohibit the Franchisee from attending any meetings or programs held or sponsored by the Franchisor;
- (d) Terminate the Franchisee's access to any computer system or software Franchisor own, maintain or license to the Franchisee (whether licensed by the Franchisor or any of its affiliates);
- (e) Suspend all services the Franchisor or its affiliate provide to the Franchisee under this Agreement or otherwise; and/or
- (f) Contact the Franchisee's landlord, lenders, suppliers, and member regarding the status of the Franchisee's operations, and provide copies of any default or other notices to the Franchisee's landlords, lenders and suppliers.
- (g) In addition, if the Franchisee notifies the Franchisor of closing the Franchised Business or otherwise communicates to others that the Franchisee is closing the Franchised Business, the Franchisee agrees that the Franchisee's billing processor may withhold up to one-half (1/2) of monies that would otherwise be payable to the Franchisee to cover any post termination obligations the Franchisee may have.
- (h) The Franchisor's actions as outlined in Section 17.1.4. may continue until the Franchisee has brought the accounts current, cured any default and complied with the Franchisor's requirements, and the Franchisee has acknowledged the same in writing.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, upon termination or expiration of the franchise agreement, all rights granted to the franchisee are terminated, unless otherwise provided in the agreement. The franchisee must immediately cease operating the franchised business and cannot represent themselves as a current or former Aplus franchisee.
The franchisee is also required to stop using Aplus's trade secrets, confidential information, the Aplus system, and all associated marks, including slogans, logos, advertising materials, and stationery. The franchisee must take necessary actions to cancel or assign any assumed name registrations containing the Aplus name or marks to Aplus, providing evidence of compliance within 30 days of termination or expiration.
Furthermore, the franchisee must pay all outstanding sums to Aplus and its affiliates. If the termination results from the franchisee's default, these sums may include damages, costs, legal fees, unpaid royalty fees, and any other amounts owed. Aplus also has the option to purchase the assets of the franchised business at fair market value within 60 days of termination or expiration, and can offset any amounts owed by the franchisee against the purchase price. The franchisee may also be required to modify the Aplus store premises to differentiate it from other Aplus locations, and if they fail to do so, Aplus has the right to de-identify the premises at the franchisee's expense.