What is the minimum quarterly distribution target amount per Common unit for Aplus?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
"total quarterly distribution per common unit target amount." The percentage interests shown for our common unitholders and our IDR holder for the minimum quarterly distribution are also applicable to quarterly distribution amounts that are less than the minimum quarterly distribution. Energy Transfer currently owns our IDRs.
| Total quarterly distribution per Common unit | Common | Holder of IDRs | |
|---|---|---|---|
| target amount | Unitholders | ||
| Mini |
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, the minimum quarterly distribution target amount is $0.4375 per Common unit. This means that Aplus aims to distribute at least this amount to its common unitholders each quarter.
The distribution structure also includes several target distribution levels above the minimum. The first target distribution is above $0.4375 up to $0.503125, where common unitholders receive 100% of the available cash. As distributions increase beyond this level, the allocation shifts, with a portion going to the holders of Incentive Distribution Rights (IDRs).
Specifically, between $0.503125 and $0.546875, common unitholders receive 85% and IDR holders receive 15%. Between $0.546875 and $0.656250, common unitholders get 75% and IDR holders get 25%. Above $0.656250, the distribution is split 50/50 between common unitholders and IDR holders. This tiered system incentivizes the IDR holders to drive higher distributions, as their share increases with the distribution level.
For a prospective Aplus franchisee, understanding this distribution structure is crucial. While the minimum distribution provides a baseline, the actual quarterly payout can vary based on the company's performance and the allocation percentages at different target levels. It's important to monitor Aplus's financial performance and distribution announcements to assess potential returns on investment.