What are the requirements for transferring an Aplus Development Agreement due to the death or disability of the Developer?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in Development Agreement | Summary | |
|---|---|---|---|
| developer which is a business entity may be offered for sale through the public offering of securities. Shares may be offered by private offering with our prior written consent. | |||
| l. | Franchisor approval of transfer by Developer | Section 8.4 | Transfers require our prior written consent, which may be withheld for any reason, in our sole subjective judgment. However, transfers that do not result in a change of control may, subject to certain conditions described in the development agreement, be completed without our prior written consent. |
| m. | Conditions for franchisor approval of transfer | Section 8.4 | You may not transfer any franchise agreement signed under the development agreement, except with our written consent and a simultaneous assignment of the development agreement and all of the franchise agreements signed under the development agreement to the same assignee. You must pay the applicable transfer fee and sign a general release. |
| n. | Franchisor's right of first refusal to acquire Developer's business | Not Applicable | Not applicable |
| o. | Franchisor's option to purchase Developer's business | Not applicable | Not applicable |
| p. | Death or disability of Developer | Section 8.9 | Same requirements as for a transfer in "m" above. If your interest is not transferred within six months following your (or an Owner's) death or legal incapacity, your development agreement may be terminated. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 53–64)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, the requirements for transferring a Development Agreement due to death or disability are the same as for any other transfer. Specifically, the transfer requirements are detailed in Section 8.4 of the Development Agreement. Aplus requires written consent for the transfer, which Aplus can withhold for any reason at their discretion. However, transfers that do not result in a change of control may be completed without prior written consent, provided certain conditions outlined in the development agreement are met.
Furthermore, according to Section 8.4, you cannot transfer any franchise agreement signed under the development agreement without Aplus's written consent. The development agreement and all franchise agreements signed under it must be assigned to the same assignee simultaneously. Additionally, the transferring party must pay the applicable transfer fee and sign a general release.
If the transfer of interest is not completed within six months following the death or legal incapacity of the Developer or an Owner, Aplus has the right to terminate the Development Agreement. This creates a time-sensitive situation for the heirs or representatives of the Developer to address the transfer and ensure compliance with Aplus's requirements to avoid termination of the agreement. Prospective franchisees should carefully consider these implications and ensure they have a plan in place to address such contingencies.
It is important for potential Aplus developers to understand these transfer conditions, as failure to comply can lead to termination of the Development Agreement. The six-month window following death or incapacity adds urgency to the transfer process. Franchisees should consult with legal and financial advisors to prepare for such scenarios and ensure a smooth transition if needed.