Can I operate a business under another Aplus franchise agreement and not have it be considered a 'Competitive Business'?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
7.3. Exclusive Relationship
For two years after termination or expiration of this Agreement, neither Franchisee nor each personal guarantor as indicated in Attachment 3 ("Personal Guarantor"), any other holder of a legal or beneficial interest in Franchisee (or any member of their immediate families or households), nor any Owner, officer, director, executive, manager or member of the professional staff of Franchisee, either directly or indirectly, for themselves, or through, on behalf of or in conjunction with any person, partnership, corporation, limited liability company or other business entity, do or perform, directly or indirectly, any act injurious or prejudicial to the goodwill associated with the Marks or the System. Further, and only in the event of Franchisee or any Owner's default of this Agreement which has led to premature termination of this Agreement, Franchisee, each Personal Guarantor, and any Owner, shall not own an interest in, invest in, manage, operate, or perform services, consult with, or be employed by or for any Competitive Business located within 20 miles of the Franchised Business or any other APLUS store, for two years after termination or expiration of this Agreement; a Competitive Business that is owned by Franchisee or an affiliate at the time of the termination is excepted from this restriction. The two-year period shall be tolled during any event of non-compliance.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to the 2024 Aplus Franchise Disclosure Document, operating a business under another Aplus franchise agreement is permitted and would not be considered a 'Competitive Business'. Section 7.3 addresses the restrictions placed on franchisees after termination or expiration of the franchise agreement.
Specifically, for two years after the agreement ends, the franchisee, personal guarantor, any holder of interest in the franchisee, or any owner, officer, director, executive, manager, or member of the professional staff cannot engage in any act that is injurious or prejudicial to the goodwill associated with the Aplus Marks or System. However, this restriction applies only if the franchisee or any owner defaults on the agreement, leading to premature termination.
Even in the event of default and termination, the restriction on owning an interest in, investing in, managing, operating, or performing services for a Competitive Business within 20 miles of the Franchised Business or any other Aplus store does not apply to a Competitive Business that is owned by the franchisee or an affiliate at the time of termination. This clause implies that owning another Aplus franchise would not be considered a 'Competitive Business' under the terms of the agreement, even after termination, as long as it was owned at the time of termination. The two-year restriction period is tolled during any period of non-compliance.
In summary, owning and operating multiple Aplus franchises simultaneously is not restricted and would not be classified as operating a 'Competitive Business'. The restrictions outlined in Section 7.3 primarily concern activities after the termination of the franchise agreement, especially in cases of default, and provide an exception for businesses already owned by the franchisee at the time of termination.