Are there any geographic limitations specified in the Aplus franchise agreement that are relevant to the provisions in this table?
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. |
| s. | Modification of the agreement | APLUS – 23.7 Premises - 2.27 | Except for those permitted to be made unilaterally by us under the APLUS Franchise Agreement or related agreements, the agreements may not be modified unless mutually agreed to in writing. |
| t. Integration/merger clause | APLUS – 23.7 Premises - 2.27 | Only the terms of the APLUS Franchise Agreement and related agreements are binding (subject to state law). |
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 table summarizing Item 17 (Renewal, Termination, Transfer, and Dispute Resolution) includes a geographic limitation related to non-competition covenants after the franchise is terminated or expires. Specifically, if a franchisee or any owner is in default leading to premature termination, they are restricted from involvement with any competitive business within 20 miles of their Aplus store or any other Aplus store. This restriction applies for two years following the termination or expiration of the franchise agreement. This limitation does not apply to competitive businesses already owned by the franchisee or an affiliate at the time of termination.
This non-compete clause means that a former Aplus franchisee who has defaulted on their agreement faces a significant restriction on their ability to operate or be involved with a competing business in the vicinity of existing Aplus locations. The 20-mile radius could cover a substantial market area, potentially limiting the franchisee's options for future business ventures. The two-year duration further compounds this limitation, requiring a significant career adjustment or relocation to avoid violating the covenant.
However, the FDD also states that Texas law applies to the Aplus Franchise Agreement (subject to applicable state law), and the venue for all proceedings is Dallas, Texas. The inclusion of state-specific addenda suggests that the enforceability and interpretation of these geographic restrictions may vary depending on the franchisee's location. Prospective franchisees should carefully review any state-specific addenda to understand how local laws might modify or impact the non-compete provisions outlined in the franchise agreement.
It is important for potential Aplus franchisees to fully understand the implications of this non-compete clause, especially the geographic scope and duration, as it could significantly impact their future business opportunities if the franchise agreement is terminated prematurely due to default. Franchisees should seek legal counsel to assess the enforceability of the non-compete agreement in their specific state and to understand their rights and obligations under the franchise agreement.