What is required of each new owner after a transfer among owners in an Aplus franchise?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
n a general release in favor of Franchisor and in the form Franchisor requires; and (d) you pay to Franchisor a $1,500 administrative fee.
- 8.3. Transfer Among Owners; Transfer of Non-Controlling Interest. If you are a Business Entity, your Owners may transfer their ownership interests in the Business Entity among each other, and may transfer up to a Non-Controlling Interest in the Business Entity to one or more third parties, if: (a) you have provided to Franchisor advance notice of the transfer; (b) Attachment C to this Agreement has been amended to reflect the new ownership; (c) each new Owner has signed a Guaranty and Personal Undertaking in the form of Attachment D; (d) each previous and/or new Owner has sign
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, if ownership interests in a Business Entity are transferred among existing owners, or a non-controlling interest is transferred to a third party, several conditions must be met. First, Aplus must receive advance notice of the transfer. Second, Attachment C of the agreement, which likely details ownership, must be updated to reflect the new ownership structure. Third, each new owner is required to sign a Guaranty and Personal Undertaking, using the form provided as Attachment D. Fourth, both the previous and new owners must sign a general release in favor of Aplus, using the form that Aplus requires. Finally, a $2,500 administrative fee must be paid to Aplus.
These requirements ensure that Aplus maintains control over who is involved in the franchise and that all parties are bound by the franchise agreement's terms. The Guaranty and Personal Undertaking likely hold the new owners personally liable for the business entity's obligations under the franchise agreement. The general release protects Aplus from potential claims by previous or new owners related to the franchise. The administrative fee likely covers Aplus's costs for processing the transfer and updating its records.
It is important to note that these conditions apply specifically to transfers among existing owners or transfers of a non-controlling interest. Other types of transfers, such as the sale of a controlling interest or the transfer of the entire agreement, may have different requirements as outlined elsewhere in the FDD. A prospective franchisee should carefully review the entire Item 22 of the FDD and consult with an attorney to fully understand the implications of these transfer provisions.