If part of the Aplus Franchise Agreement is unenforceable, what happens to the rest of the agreement?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
23.8. Severability
23.8.1. Except as noted below, each Section, part, term and provision of this Agreement shall be considered severable. If any Section, paragraph, part, term or provision herein is ruled to be unenforceable, unreasonable or invalid, such ruling shall not impair the operation of or affect the remaining portions, Sections, paragraphs, parts, terms and provisions of this Agreement, and the latter shall continue to be given full force and effect and bind the parties; and such unenforceable, unreasonable or invalid Sections, paragraphs, parts, terms or provisions shall be deemed not part of this Agreement. If Franchisor determines that a finding of invalidity adversely affects the basic consideration of this Agreement, Franchisor has the right to, at its option, terminate this Agreement.
23.8.2. Notwithstanding the above, each of the covenants contained in Sections 7 and 17 shall be construed as independent of any other covenant or provision of this Agreement. If all or any portion of any such covenant is held to be unenforceable, unreasonable or invalid, then it shall be amended to provide for limitations on disclosure of Trade Secrets or other Confidential Information to the maximum extent provided or permitted by law.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, the enforceability of the Franchise Agreement is addressed in Section 23.8, which discusses severability. Generally, if any part of the agreement is deemed unenforceable, unreasonable, or invalid, it will not affect the remaining portions of the agreement. The rest of the agreement will remain in full effect, as if the unenforceable part was never included. However, if Aplus determines that the finding of invalidity affects the basic consideration of the agreement, Aplus has the option to terminate the agreement.
There is an exception to this general rule regarding Sections 7 and 17 of the Aplus Franchise Agreement. The covenants in these sections are considered independent of any other covenant or provision in the agreement. If any part of these covenants is deemed unenforceable, unreasonable, or invalid, it will be amended to provide the maximum possible limitations on the disclosure of trade secrets or other confidential information as permitted by law.
This severability clause is a fairly standard provision in franchise agreements. It aims to preserve the agreement as much as possible, while still allowing for judicial review and potential invalidation of specific terms. However, the clause also gives Aplus the right to terminate the agreement if the invalidated portion is critical enough to the overall purpose of the agreement. Prospective franchisees should understand that while the agreement is designed to remain intact even if some parts are challenged, there is a risk of termination if a key provision is deemed invalid and Aplus believes it fundamentally alters the agreement's basis.