What are the potential consequences if a franchisee fails to meet their development schedule obligations under the Aplus development agreement?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
If you fail to meet any of your obligations under the development agreement, including the development schedule obligations, we may (i) terminate or modify any territorial protections granted to you, (ii) reduce the size of the development area, or (iii) reduce the number of APLUS Stores which you may establish under the development schedule. There are no other circumstances that permit us to modify your territorial rights under the development agreement.
Source: Item 12 — TERRITORY (FDD page 47)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, failing to meet development schedule obligations under the development agreement can lead to specific repercussions. Aplus has the right to take corrective actions if a franchisee does not meet their development obligations.
Specifically, Aplus may choose to terminate or modify any territorial protections initially granted to the franchisee. This means the area where the franchisee has exclusive or protected rights could be reduced or eliminated entirely. Additionally, Aplus could reduce the size of the development area, limiting the geographic scope in which the franchisee is allowed to develop Aplus stores.
Furthermore, Aplus can reduce the number of Aplus stores that the franchisee is permitted to establish under the agreed-upon development schedule. This directly impacts the franchisee's expansion plans and potential revenue. It is important to note that the FDD states these are the only circumstances under which Aplus can modify a franchisee's territorial rights under the development agreement, providing some clarity and limitation to Aplus's recourse.