Which provisions or covenants of the Aplus franchise agreement remain in effect after the agreement expires or terminates?
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
be, located within the former Development Area; or (b) within a 25-mile radius of any APLUS Store in existence or under development at the time of such termination. Any Competitive Business that is already owned by you or your Affiliate at the time of early termination due to default is excepted from this Section 10.1. The obligations described in this Section 10.1 shall be tolled during any period of noncompliance and shall exclude any Competitive Business already open for business to the public at the time of expiration or termination of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, any provision or covenant within the agreement that explicitly or by its nature imposes obligations extending beyond the expiration or termination of the agreement will remain in effect after the agreement ends. This is a fairly standard clause in franchise agreements, designed to protect the franchisor's interests even after the franchisee is no longer part of the system.
One specific example of such a provision is the non-competition covenant. For a two-year period following a default that leads to early termination, the franchisee and any affiliates are restricted from engaging in or having an interest in any Competitive Business within the former Development Area or within a 25-mile radius of any existing or developing Aplus store. This restriction does not apply to any Competitive Business already owned by the franchisee or their affiliate at the time of early termination due to default, or any Competitive Business already open to the public at the time of expiration or termination.
These post-termination covenants are put in place to protect Aplus's brand, customer relationships, and market share. Franchisees should carefully review these provisions to understand the full scope of their obligations after the franchise agreement ends, as violating these covenants could result in legal action by the franchisor.