What is the name of the fee associated with transferring an Aplus franchise?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
ransfer Consideration with a minimum of $15,000 | | Year 2 | 45% of the Transfer Consideration with a minimum of $15,000 | | Year 3 | 40% of the Transfer Consideration with a minimum of $15,000 | | Year 4 | 30% of the Transfer Consideration with a minimum of $15,000 | | Year 5 | 25% of the Transfer Consideration with a minimum of $15,000 | | Year 6 | 20% of the Transfer Consideration with a minimum of $15,000 | | Year 7 | 15% of the Transfer Consideration with a minimum of $15,000 | | Year 8+ | 10% of the Transfer Consideration with a minimum of $15,000 |
The Transfer Fee shall be ten percent (10%) of the Transfer Consideration where:
- (i) a second (or third, etc.) transfer of the applicable Premises occurs during the ten (10) year period from the major capital spend (i.e. capital in excess of four hundred thousand dollars ($400,000), and
- (ii) Franchisor received, in connection with the first transfer, the transfer fee per the above schedule.
Under the following circumstances, the Transfer Fee may be reduced to a lesser amount, but in no event less than one thousand five hundred ($1,500.00) dollars:
- (a) Transfer from a sole proprietor to a wholly owned corporation in which 100% of the shares of the corporation are held by the former sole proprietor;
- (b) Transfer to a corporation where there are only two (2) shareholders and you will be the 51% shareholder;
- (c) Transf
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, the fee associated with transferring a franchise is called the "Transfer Fee." The Transfer Fee is calculated as ten percent (10%) of the Transfer Consideration under specific circumstances. These circumstances include a second (or third, etc.) transfer of the applicable Premises occurring during the ten (10) year period from a major capital spend (capital in excess of $400,000), and if Aplus received the transfer fee per the above schedule in connection with the first transfer.
However, the Transfer Fee may be reduced to no less than $1,500 under certain conditions. These conditions include transfers from a sole proprietor to a wholly-owned corporation, transfers to a corporation with only two shareholders where the franchisee holds 51% of the shares, transfers of minority stock in a corporation with multiple shareholders where one shareholder retains 51% of all shares, the dissolution of a two-partner partnership or a two-shareholder corporation resulting in one of the former partners or shareholders remaining as a sole proprietor, and corporate name changes only of the franchisee, provided that the franchisee details the reasons for the change and Aplus consents to the request.
For a prospective Aplus franchisee, understanding the Transfer Fee and its conditions is crucial. If a franchisee anticipates selling or transferring their Aplus store, they should be aware of the potential costs involved, which can be significant depending on the transfer consideration and whether the conditions for a reduced fee are met. It is important to note the specific circumstances under which the 10% fee applies, particularly concerning major capital expenditures and previous transfers. Franchisees should carefully document any capital spends exceeding $400,000 to track the ten-year period affecting the transfer fee calculation.