What is the time period after termination or expiration of the Aplus Development Agreement during which the non-compete obligations apply?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
For a two-year period after I cease to be an Owner (or two years after termination or expiration of the Development Agreement, whichever occurs first) and if I am in default of the Development Agreement, I will not:
(a) Divert or attempt to divert any present or prospective customer of the APLUS Store to any competitor or do anything to harm the goodwill associated with the Marks and the System; or
(b) Own, maintain, advise, operate, engage in, be employed by, make loans to, invest in, provide any assistance to, or have any interest in (as owner or otherwise) or relationship or association with any Competitive Business, and (a) is, or is intended to be, located within the former Development Area; or (b) within a 25-mile radius of any APLUS Store in existence or under development at the time of such expiration, termination or transfer.
The obligations described in this Section 6 shall be tolled during any period of noncompliance and shall exclude any Competitive Business already open for business to the public at the time of expiration or termination of the Development Agreement.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, the non-compete obligations for owners extend for a two-year period after they cease to be an owner or two years after the termination or expiration of the Development Agreement, whichever occurs first, provided the owner is in default of the Development Agreement. During this period, the owner is restricted from engaging in activities that could harm the goodwill associated with the Aplus brand or competing with Aplus stores. This includes soliciting customers, or being involved with a Competitive Business within the former Development Area or within a 25-mile radius of any existing or developing Aplus store.
These restrictions are designed to protect Aplus's market presence and confidential information. The non-compete obligations are tolled during any period of noncompliance, meaning the clock stops running if the owner violates the agreement, effectively extending the restriction period. Additionally, any Competitive Business already open to the public at the time of the Development Agreement's expiration or termination is excluded from these restrictions.
For a prospective Aplus franchisee, this means that upon leaving the Aplus system, they will be unable to operate a competing business in the defined area for two years. This could limit their future business opportunities and should be carefully considered before entering into a Development Agreement with Aplus. It is important to understand the scope and limitations of these non-compete clauses to avoid potential legal issues after the agreement ends.