What is the radius restriction for competitive businesses concerning existing Aplus stores at the time of expiration, termination, or transfer?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
For a two-year period after I cease to be an Owner (or two years after termination or expiration of the Development Agreement, whichever occurs first) and if I am in default of the Development Agreement, I will not:
(a) Divert or attempt to divert any present or prospective customer of the APLUS Store to any competitor or do anything to harm the goodwill associated with the Marks and the System; or
(b) Own, maintain, advise, operate, engage in, be employed by, make loans to, invest in, provide any assistance to, or have any interest in (as owner or otherwise) or relationship or association 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 expiration, termination or transfer.
The obligations described in this Section 6 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 the Development Agreement.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, if a developer ceases to be an owner or the Development Agreement is terminated or expires, they are restricted from involvement with a Competitive Business. This restriction applies for two years after the event.
Specifically, the developer cannot own, maintain, advise, operate, engage in, be employed by, make loans to, invest in, provide assistance to, or have any interest in a Competitive Business. This restriction applies if the Competitive Business is located within the former Development Area or within a 25-mile radius of any Aplus store that exists or is under development at the time of expiration, termination, or transfer.
However, this obligation is suspended during any period of noncompliance. Also, the restriction does not apply to any Competitive Business that was already open to the public when the Development Agreement expired or was terminated. This non-compete clause ensures that former developers do not directly compete with existing Aplus stores shortly after leaving the franchise system, protecting the brand's market position.