Under what circumstances will the Aplus Franchise Agreement automatically terminate due to insolvency?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
The Franchise Agreement will terminate automatically, without notice, if Franchisee becomes insolvent (meaning unable to pay bills in the ordinary course of business as they become due); if Franchisee files a petition or have a petition initiated against it under federal bankruptcy laws or similar state laws; if a receiver of Franchisee's property or any part thereof is appointed by a court; if Franchisee makes a general assignment for the benefit of its creditors; if a final judgment against Franchisee remains unsatisfied of record for thirty (30) days or longer (unless supersedeas bond is filed); if execution is levied against Franchisee's business or property; or if a suit to foreclose any lien or mortgage against Franchisee's Franchised Business office or equipment is instituted against Franchisee and not dismissed within thirty (30) days or is not in the process of being dismissed.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, the Franchise Agreement will automatically terminate without notice if the franchisee becomes insolvent. Insolvency is defined as being unable to pay bills in the ordinary course of business as they become due.
In addition to insolvency, automatic termination occurs if the franchisee files a petition or has a petition initiated against them under federal bankruptcy laws or similar state laws. The agreement also terminates automatically if a court appoints a receiver of the franchisee's property or any part thereof.
Further conditions leading to automatic termination include the franchisee making a general assignment for the benefit of its creditors, a final judgment against the franchisee remaining unsatisfied of record for thirty (30) days or longer (unless a supersedeas bond is filed), execution being levied against the franchisee's business or property, or a suit to foreclose any lien or mortgage against the franchisee's Franchised Business office or equipment being instituted against the franchisee and not dismissed within thirty (30) days or not in the process of being dismissed. These conditions provide Aplus with protections in the event of severe financial distress or legal actions against the franchisee.