If an Aplus franchisee fails to meet obligations under an agreement with an affiliate, is that considered a default?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or other agreement | Summary |
|---|---|---|
| or | ||
| similar | ||
| state | ||
| laws; | ||
| or | ||
| has | ||
| outstanding | ||
| judgments against it or any Owner for over 30 | ||
| days, (xxiii) any default under any agreement | ||
| between you and us or our Affiliate (cross | ||
| defaults) (xxiv) failure on 2 or more separate | ||
| noticed occasions to comply with the same | ||
| obligation in any time-frame, and (xxv) receive | ||
| two or more default notices within 12 month time | ||
| frame | ||
| for | ||
| any | ||
| violation | ||
| of | ||
| the | ||
| franchise | ||
| agreement or the System Standards. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 53–64)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, a franchisee's failure to meet obligations under an agreement with an Aplus affiliate can be considered a default, leading to potential termination of the franchise agreement. Specifically, if there is any default under any agreement between the franchisee and Aplus or its affiliate, it is considered a cross default.
This provision protects Aplus from potential damages caused by a franchisee's financial instability or failure to uphold agreements with related entities. It ensures that franchisees maintain good standing across all their dealings with Aplus and its affiliates.
For a prospective Aplus franchisee, this means that all agreements with Aplus and its affiliates must be carefully reviewed and adhered to. Failure to do so could trigger the cross-default clause, potentially resulting in the loss of the franchise. Franchisees should maintain open communication with Aplus regarding any potential difficulties in meeting obligations to avoid such defaults.