For how long after early termination due to default is the franchisee of Aplus prohibited from engaging in a Competitive Business?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
10.1. Non-Competition After Expiration or Termination of Agreement. For a two-year period following a default that has led to early termination of this Agreement, you and any Affiliate shall not either directly or indirectly, for yourselves, or through, on behalf of, or in conjunction with any person, persons, or legal entity, own, maintain, advise, operate, engage in, be employed by, perform services for, consult with, or have any interest in, a relationship, or associate with any Competitive Business, and (a) is, or is intended to
be, located within the former Development Area; or (b) within a 25-mile radius of any APLUS Store in existence or under development at the time of such termination. Any Competitive Business that is already owned by you or your Affiliate at the time of early termination due to default is excepted from this Section 10.1. The obligations described in this Section 10.1 shall be tolled during any period of noncompliance and shall exclude any Competitive Business already open for business to the public at the time of expiration or termination of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, if the franchise agreement is terminated early due to a franchisee's default, the franchisee and any affiliates are restricted from involvement with a Competitive Business for two years. This restriction includes owning, maintaining, advising, operating, or being employed by a Competitive Business.
This non-compete clause applies to businesses that are either located within the former Development Area or within a 25-mile radius of any Aplus store that exists or is under development at the time of termination. However, any Competitive Business already owned by the franchisee or their affiliate at the time of the early termination due to default is exempt from this restriction.
The obligations under this non-compete agreement are suspended during any period of noncompliance. Additionally, the non-compete does not apply to any Competitive Business that was already open to the public at the time of the agreement's expiration or termination. This clause is designed to protect Aplus's market and confidential information by preventing franchisees from immediately using their knowledge to benefit a competitor after a default and early termination.