Which provisions or covenants of the Aplus agreement survive its expiration or termination?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
- 13.4. Survival of Terms. Any provision or covenant of this Agreement which expressly or by its nature imposes obligations beyond the expiration or termination of this Agreement shall survive such expiration
or termination.
- 10.1. Non-Competition After Expiration or Termination of Agreement. For a two-year period following a default that has led to early termination of this Agreement, you and any Affiliate shall not either directly or indirectly, for yourselves, or through, on behalf of, or in conjunction with any person, persons, or legal entity, own, maintain, advise, operate, engage in, be employed by, perform services for, consult with, or have any interest in, a relationship, or associate with any Competitive Business, and (a) is, or is intended to
I will comply with all of the provisions contained in Article 6 of the Development Agreement concerning the use of the Confidential Information.
I will maintain the confidentiality of all Confidential Information disclosed to me.
I agree to use the Confidential Information only for the purposes authorized under the Development Agreement.
I further agree not to disclose any of the Confidential Information, except (a) to the Developer's employees on a need to know basis, (b) to the Developer's and my legal and tax professionals to the extent necessary for me to meet my legal obligations, and (c) as otherwise may be required by law.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, several provisions and covenants within the franchise agreement survive its expiration or termination. Specifically, any provision or covenant that expressly or by its nature imposes obligations beyond the expiration or termination of the agreement will remain in effect. This is a standard practice in franchising to protect the brand and the franchisor's interests even after the agreement ends.
One key example is the non-competition covenant. For a two-year period following a default that has led to early termination, the franchisee and any affiliate are restricted from engaging in any competitive business within a specific geographic area. This area includes the former development area or within a 25-mile radius of any existing or developing Aplus store at the time of termination. This restriction aims to prevent franchisees from using the knowledge and experience gained during their franchise term to directly compete with Aplus.
Additionally, the obligation to maintain the confidentiality of information survives the termination of the Development Agreement. Owners must comply with provisions concerning the use of confidential information, maintaining its confidentiality and using it only for authorized purposes. They are restricted from disclosing confidential information, except to employees on a need-to-know basis, legal and tax professionals for legal obligations, or as required by law. These measures are in place to protect Aplus's proprietary information and trade secrets, which are crucial to maintaining its competitive edge in the market.
These surviving provisions are typical in franchise agreements to protect the franchisor's brand, trade secrets, and market position. Prospective Aplus franchisees should carefully review these clauses to understand their obligations even after the franchise agreement concludes, especially regarding non-competition and confidentiality.