Under what circumstances can Sunoco revoke or terminate the Aplus franchise agreement due to construction or conversion costs?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
rship or a two-shareholder corporation resulting in one of the former partners or shareholders remaining as a sole proprietor; and
- (e) Corporate name change only of the franchisee provided that franchisee in its notice to Franchisor details the reason(s) for the requested name change and provides any additional information required by Franchisor and Franchisor consents to the request.
7. Supplemental Terms:
The parties acknowledge and agree that the Agreement is hereby supplemented by the inclusion of the following terms and conditions:
"22. STORE SPECIFIC ADDITIONAL TERMS AND CONDITIONS
- 22.1. Construction/Conversion of Leased APLUS Store Premises
- 22.1.1. Within the timeframe established by Sunoco, Sunoco shall undertake such construction or conversion of the Premises as is necessary, in Sunoco's sole opinion, to make the Premises suitable for operation of an APLUS Store. Notwithstanding the foregoing, in addition to any other rights of termination, Sunoco may revoke this Agreement before the Commencement Date in the event any of the following conditions ("Conditions Precedent") have not been satisfied. The Conditions Precedent are as follows:
- 22.1.1.a. Sunoco must obtain, in a form satisfactory to Sunoco, all licenses, permits, variances, and other required governmental approvals necessary for such construction and conversion of the Premises.
- 22.1.1.b. Sunoco must obtain, in a form satisfactory to Sunoco, contractor(s) bid(s) covering all construction and/or conversion, including the cost of installing all Store equipment to be installed by Sunoco, but not including the purchase price of the Store equipment. Sunoco retains the right to reject any bids that are not acceptable in Sunoco's sole opinion.
- 22.1.1.c. If the Premises is located in a jurisdiction where beer and wine licenses are available to convenience food store operators, Franchisee must obtain a beer and wine license at your sole cost and expense. If by law, a beer and wine license is not available until construction is completed or the APLUS Store is open for business, this requirement shall be waived as a Condition Precedent; however, you acknowledge and agree you will diligently pursue obtaining a beer and wine license at the earliest possible date.
- 22.1.1.d.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, Sunoco has specific rights regarding the termination of the franchise agreement related to construction or conversion of the Aplus store premises. Sunoco may revoke the agreement before the Commencement Date if certain conditions are not met. These conditions include obtaining necessary governmental approvals (licenses, permits, variances) for construction and conversion, securing acceptable contractor bids for the work (excluding the purchase price of store equipment), and, if applicable, the franchisee obtaining a beer and wine license at their own cost.
Specifically, Sunoco can terminate the agreement if circumstances arise before the Commencement Date that make the construction or conversion of the premises uneconomical, in Sunoco's sole discretion. Additionally, Sunoco reserves the right to terminate the agreement if the franchisee does not complete the required construction or conversion of the premises to meet Aplus system standards.
These stipulations highlight the importance of thorough due diligence and financial planning for prospective Aplus franchisees. The franchisee bears the risk of Sunoco deeming the project uneconomical or failing to meet construction standards, potentially leading to termination of the agreement. Franchisees should seek clarity on what specific factors Sunoco considers when evaluating the economic viability of construction or conversion, and what recourse they have if Sunoco terminates the agreement under these conditions.