Under what circumstances is an Aplus franchisee required to make improvements or modifications to the system, regardless of cost?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee recognizes that from time to time, Franchisor may introduce, as part of the System, other methods or technology which require certain System modifications including, without limitation, the adoption and use of modified or substitute Marks, new computer hardware and software, equipment or signs. Franchisee agrees to make all required upgrades and modifications at its expense as may be required by Franchisor; provided, however, that Franchisee shall not be required to make any expenditures during the first year of the initial term or any expenditures which are unreasonably disproportionate to Franchisee's initial investment to establish the Franchised Business during the initial term. If such additional investment is required to be made in the last year of the initial term, Franchisee may avoid making the investment by providing notice of intent not to renew the Franchise unless the investment is in connection with a modification to the System required by law or court order. Franchisee acknowledges that any required
expenditures for changes or upgrades to the System shall be in addition to expenditures for fits and maintenance as required in Section 13.2 of this Agreement. Notwithstanding the foregoing, Franchisee shall be required to make any and all improvements or modifications whenever such are required by law, regulation, agency decision or court order.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, franchisees are generally responsible for upgrades and modifications to the system at their own expense. However, there are some limitations to this requirement. Aplus franchisees are not required to make expenditures during the first year of the initial franchise term, or any expenditures that are unreasonably disproportionate to the franchisee's initial investment to establish the franchised business during the initial term. If additional investment is required in the last year of the initial term, the franchisee can avoid the investment by providing notice of intent not to renew the franchise, unless the investment is required by law or court order.
Despite these limitations, Aplus franchisees are required to make any and all improvements or modifications whenever such changes are required by law, regulation, agency decision, or court order. This means that if a new law or regulation mandates a specific change to the Aplus store or its operations, the franchisee must comply, regardless of the cost. This could include changes to equipment, signage, or even the store layout to meet new safety or accessibility standards.
This requirement ensures that all Aplus franchises remain compliant with applicable laws and regulations, which protects the brand's reputation and avoids potential legal issues. However, it also places a financial burden on the franchisee, who must be prepared to invest in these mandatory upgrades or modifications. Prospective franchisees should consider this potential cost when evaluating the Aplus franchise opportunity and factor it into their financial planning.
Furthermore, upon termination or expiration of the franchise agreement, Aplus franchisees are responsible for modifying the premises to distinguish it from other Aplus stores. This includes changing the color scheme and other distinctive design features. If the franchisee fails to do so, Aplus has the right to enter the premises and take necessary actions to de-identify the store, with the franchisee bearing the costs.