Who owns the replacement equipment or parts for equipment purchased under the Funding Agreement for an Aplus store?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
As it relates to the equipment purchased under the Funding Agreement, you, at your own cost and expense, shall (a) maintain the equipment in good repair and operating condition, (b) replace any equipment that is stolen, lost, destroyed or damaged beyond repair, which replacement equipment shall become our property, (c) replace any parts of the equipment which become worn out, lost, destroyed or damaged, which replacement parts shall become our property, (d) file the necessary tax returns and pay any property taxes associated with the equipment, and (e) obtain insurance coverage for the equipment as required by the terms of your agreement.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, if a franchisee accepts funding from Sunoco for equipment, any replacement equipment or parts become the property of Sunoco. Specifically, the franchisee is responsible for maintaining the equipment in good repair and replacing any equipment that is stolen, lost, destroyed, or damaged beyond repair.
This means that while the franchisee bears the cost of replacing equipment or parts, the ownership of those replacements transfers to Sunoco. The franchisee is also responsible for filing necessary tax returns, paying property taxes, and obtaining insurance coverage for the equipment.
This arrangement could impact the franchisee in several ways. For example, the franchisee will not be able to claim ownership of the replacement equipment as an asset. Additionally, at the termination of the franchise agreement, the franchisee will not be able to sell the replacement equipment, as it is owned by Sunoco. Franchisees should consult with a financial advisor to understand the full implications of this agreement.