What does the Owner guarantee under the Aplus Development Agreement?

According to Aplus's 2024 Franchise Disclosure Document, the Owner provides a personal guarantee for the Development Agreement. This means the Owner guarantees the prompt and full payment of all amounts owed by the Developer under the Development Agreement. The Owner must pay all amounts due under this Guaranty within 14 days after receiving notice from Aplus that the Developer has failed to make the required payment. Aplus does not need to exhaust its remedies against the Developer before seeking recovery from the Owner under this Guaranty.

This guarantee ensures that Aplus has recourse to the Owner's personal assets should the Developer, which is the business entity, fail to meet its financial obligations. This is a common practice in franchising, as it provides the franchisor with an additional layer of security and demonstrates the Owner's commitment to the success of the Aplus franchise. The FDD also states that no modification, change, impairment, or suspension of any of Aplus's rights or remedies will affect the Owner's obligations under this Guaranty.

Additionally, for a two-year period after ceasing to be an Owner (or two years after termination or expiration of the Development Agreement, whichever occurs first) and if the Owner is in default of the Development Agreement, the Owner is restricted from engaging in activities that could harm Aplus's business. Specifically, the Owner cannot divert customers to competitors or harm the goodwill associated with the Aplus brand. The Owner is also prohibited from owning, operating, or being involved with any Competitive Business within the former Development Area or within a 25-mile radius of any Aplus store in existence or under development at the time of expiration, termination, or transfer.

These obligations are tolled during any period of noncompliance and exclude any Competitive Business already open to the public at the time of expiration or termination of the Development Agreement. If Aplus brings any legal action to enforce its rights under this Guaranty, the Owner will reimburse Aplus its reasonable attorneys' fees and costs. The Owner must also comply with the provisions in Article 6 of the Development Agreement concerning the use of Confidential Information and Article 8 of the Development Agreement concerning the assignment of the Development Agreement.