Under what circumstances can Aplus increase the minimum liability protection requirement annually?

According to Aplus's 2024 Franchise Disclosure Document, Aplus has the right to increase the minimum liability protection requirement annually. This increase must be reasonable and can be implemented to reflect inflation, changes in liability standards, future damage awards, or other relevant changes in circumstances.

For a prospective Aplus franchisee, this means that the cost of insurance coverage required to operate the franchise could increase over time. These increases are tied to external factors like inflation and legal trends, which are generally outside of the franchisee's control. It is important to note that Aplus retains the right to determine what constitutes a 'reasonable' increase.

This provision allows Aplus to ensure that all franchisees maintain adequate liability coverage in a changing economic and legal landscape. While this protects Aplus from potential liabilities, it also means that franchisees need to budget for potential increases in their insurance expenses. Franchisees should discuss with Aplus what typical increases have been in past years and what factors are most likely to trigger an increase in the future to better prepare for these costs.

It is fairly common in franchising for franchisors to reserve the right to adjust insurance requirements to keep pace with changing conditions. Franchisees should carefully review the insurance requirements outlined in the Franchise Agreement and discuss any concerns with Aplus before signing.