Are there any exceptions to the non-competition covenants for Aplus franchisees after termination or expiration of the franchise agreement?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or other agreement | Summary | |
|---|---|---|---|
| q. | Non-competition covenants during the term of the franchise | No provision | There is no covenant by either party not to compete. |
| r. | Non-competition covenants after the franchise is terminated or expires | APLUS - 7 | In the event you or any owner is in default which has led to premature termination of the franchise agreement, you and any owner are prohibited from owning an interest in, investing in, managing, operating, or performing services, consulting with, or be employed by or for any competitive business located within 20 miles of your APLUS Store or any other APLUS Store, for two years after termination or expiration of the franchise agreement. Excepted from this restriction are any competitive businesses owned by you or an affiliate at the time of termination of the franchise agreement. |
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, there are specific non-competition covenants that apply to franchisees after the termination or expiration of their franchise agreement. These covenants are outlined in Section APLUS - 7 of the agreement.
Specifically, if a franchisee or any owner is in default, leading to the premature termination of the franchise agreement, they are restricted from engaging in any competitive business within a 20-mile radius of their Aplus store or any other Aplus store. This restriction applies for two years following the termination or expiration of the franchise agreement.
However, there is an exception to this non-compete clause. The restriction does not apply to any competitive businesses that the franchisee or an affiliate already owned at the time the franchise agreement was terminated. This means that if a franchisee had a pre-existing competitive business, they are not obligated to cease its operation due to the termination of the Aplus franchise.