Under what circumstances does the Aplus Development Agreement terminate, other than by negotiated termination or extension?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
2.1. Term. Unless sooner terminated, the term ("Term") of this Agreement begins on the Effective Date and, unless otherwise negotiated, terminated, or extended as provided in this Agreement, expires on the earlier of: (a) the date on which you have completed your development obligations under this Agreement, or (b) 12:00 midnight CST on the last day of the last Development Period identified in Attachment B.
9.5. Termination Related to Death or Permanent Incapacity.
Franchisor has the right to terminate this Agreement if an approved transfer as required by Section 8.9 is not effected within the designated time frame following a death or permanent incapacity (mental or physical).
- 9.6. Cross-Default.
Any default under any agreement between you and Franchisor or its Affiliates, which your failure to cure within any applicable cure period, shall be considered a default under this Agreement and shall provide an independent basis for termination of this Agreement.
- 9.7. Additional Remedies.
If you are in Default of this Agreement, Franchisor may, in its sole discretion, elect to reduce the number of Stores which you may establish pursuant to the Development Schedule.
If Franchisor elects to exercise this remedy as set forth above, you agree to continue to develop Stores in accordance with your rights and obligations under this Agreement, as modified.
Franchisor's exercise of its remedy under this Section 9.7 shall not constitute a waiver by Franchisor to exercise Franchisor's option to terminate this Agreement at any time with respect to a subsequent event of default of a similar or different nature
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, the Development Agreement can be terminated under specific circumstances. The agreement's term begins on the effective date and expires either when the developer completes their obligations or at 12:00 midnight CST on the last day of the final Development Period, as detailed in Attachment B, unless terminated sooner.
Specifically, Aplus has the right to terminate the Development Agreement if an approved transfer, as required by Section 8.9, does not occur within the designated timeframe following the death or permanent incapacity (mental or physical) of the developer. Additionally, any default under any agreement between the developer and Aplus or its affiliates, which is not cured within the applicable cure period, constitutes a default under the Development Agreement, providing an independent basis for termination.
Furthermore, if a developer defaults on the Development Agreement, Aplus retains the discretion to reduce the number of stores the developer is allowed to establish under the Development Schedule. Exercising this remedy does not prevent Aplus from terminating the agreement later for a subsequent default. These termination clauses are typical in franchise agreements to protect the franchisor's brand and ensure compliance.
These terms are important for potential Aplus developers to understand, as failure to meet obligations or properly transfer the agreement could lead to termination. It is also important to note that Aplus retains other rights, such as granting other franchises within the development area, which could impact the developer's business.