If a franchisee owns less than 5% of a publicly-held entity, is that entity considered a 'Competitive Business' to the Aplus franchise?

According to Aplus's 2024 Franchise Disclosure Document, a 'Competitive Business' is defined as any business that offers or provides competitive services or grants franchises/licenses to others that do so. However, there are exceptions to this definition.

Specifically, the definition of 'Competitive Business' does not apply to any business operated by Aplus's Developer under a Franchise Agreement with Aplus. More importantly, it also does not apply to any business operated by a publicly-held entity in which the Developer (which includes the franchisee) owns less than a five percent (5%) legal or beneficial interest.

In practical terms, this means that an Aplus franchisee can own a small stake (less than 5%) in a publicly-traded company that might be considered a competitor without violating the terms of the franchise agreement. This provides some flexibility for franchisees to diversify their investments without being penalized by the non-compete clauses typically found in franchise agreements.