What is the minimum amount required for the Collateral Security Deposit for an Aplus store?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
anchisor approves.
3.3. Minimum Monthly Royalty Fee
If the Royalty Fee paid to Franchisor is less than the respective minimum monthly royalty fee ("Minimum Monthly Royalty Fee") as described in Attachment 1, then Franchisee shall pay to Franchisor the difference between monthly Royalty Fee and the respective Minimum Monthly Royalty Fee, payable at the same time and in the same manner as the Royalty Fee.
3.4. Collateral Security Deposit
Prior to the opening of the Store, you shall deposit with us cash collateral in the amount stated in Attachment 1 ("Collateral Security Deposit"). The Collateral Security Deposit shall be held by Sunoco as one general, continuing, collateral security for the discharge and payment of the whole, or any part of any present, past, or future obligation indebtedness, or liability of you to Sunoco. You agree to enter into any additional financing statements, security agreement, or other documents deemed necessary by Sunoco. Further:
- 3.4.1. You shall pay to Sunoco a Collateral Security Deposit in an amount determined by Sunoco
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, a franchisee must deposit cash collateral with Sunoco prior to opening their Aplus store. This Collateral Security Deposit acts as security for any present, past, or future obligations the franchisee may have to Sunoco. The franchisee must also agree to enter into any additional financing statements or security agreements deemed necessary by Sunoco.
The minimum amount for the Collateral Security Deposit is $10,000, although the exact amount is determined by Sunoco and may also be stated in Attachment 1 of the franchise agreement. Sunoco retains the right to require a larger deposit or additional security at any time during the contractual period, even before the store opens.
This deposit is held by Sunoco and can be used to cover any outstanding debts, liabilities, or taxes owed by the franchisee. The amount of the deposit can be changed, substituted, reduced, or increased by mutual agreement between Sunoco and the franchisee. The franchisee also authorizes Sunoco to use the collateral security for any outstanding obligations or liabilities, even those Sunoco may become liable for during the relationship. Upon termination or expiration of the franchise agreement, Sunoco will return the deposit, less any deductions for costs incurred due to the franchisee's default, indebtedness, liabilities, or damage to the premises or store equipment.