Regarding payments to Aplus, is a franchisee permitted to withhold royalty fees or other amounts due to the franchisor or an affiliate, and why or why not?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
23.12. Withholding Payments
Franchisee shall not, for any reason, withhold payment of any Royalty Fees or other amounts due to Franchisor or to an Affiliate. Franchisee shall not withhold or offset any amounts, damages or other monies allegedly due to Franchisee against any amounts due to Franchisor. No endorsement or statement on any payment for less than the full amount due to Franchisor will be construed as an acknowledgment of payment in full, or an accord and satisfaction, and Franchisor has the right to accept and cash any such payment without prejudice to Franchisor's right to recover the full amount due, or pursue any other remedy provided in this Agreement or by law. Franchisor has the right to apply any payments made by Franchisee against any of Franchisee's past due indebtedness as Franchisor deems appropriate. Franchisor shall set off sums Franchisor owes to Franchisee against any unpaid debts owed by Franchisee to Franchisor.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, franchisees are explicitly prohibited from withholding payments of any kind. The FDD states that franchisees cannot withhold Royalty Fees or any other amounts owed to Aplus or its affiliates, regardless of the reason. This includes withholding or offsetting amounts for alleged damages or other monies the franchisee believes are due to them.
This policy is further reinforced by the statement that any endorsement or statement on a payment for less than the full amount due will not be considered an acknowledgment of payment in full. Aplus retains the right to accept and cash such payments without waiving its right to recover the full amount due. Additionally, Aplus has the right to apply any payments made by the franchisee against any past due debts as it deems appropriate, and can offset sums it owes to the franchisee against any unpaid debts the franchisee owes to Aplus.
For a prospective Aplus franchisee, this means that all fees and payments must be made in full and on time, without any deductions or offsets. Failure to comply with this policy could result in penalties, legal action, or other remedies available to Aplus under the franchise agreement or by law. This is a fairly standard clause in franchise agreements, designed to ensure a consistent revenue stream for the franchisor and avoid disputes over payment amounts. Franchisees who believe they are owed money by Aplus must pursue separate legal or contractual remedies without disrupting the regular payment schedule.