How is 'Transfer Consideration' defined for an Aplus franchise transfer?

According to Aplus's 2024 Franchise Disclosure Document, "Transfer Consideration" is defined as the total price for the assignment of all businesses conducted at the Aplus store. From this total, the amount paid for the transfer of inventories at cost and equipment at fair market value is subtracted. This calculation determines the base amount upon which the transfer fee is calculated.

This definition is important for prospective Aplus franchisees because the transfer fee can be a significant cost when selling their franchise. The fee is calculated as a percentage of the Transfer Consideration, with the percentage varying based on the capital Aplus spent on major projects at the premises within the 10 years prior to the transfer or assignment. If the capital spent is equal to, or less than, $400,000, the transfer fee is the greater of 10% of the Transfer Consideration or $15,000.

If the capital Aplus spent on major projects at the premises within the past 10 years prior to the transfer or assignment is greater than $400,000, the transfer fee is calculated based on a table that considers the years since the capital spending. For example, if the transfer occurs in Year 1 after the capital spending, the transfer fee is 50% of the Transfer Consideration with a minimum of $15,000. In Year 8 or later, the transfer fee is 10% of the Transfer Consideration with a minimum of $15,000. Understanding how Transfer Consideration is defined is crucial for estimating potential transfer fees and making informed decisions about selling the franchise.