Under what circumstances can Aplus terminate the franchise agreement if the franchisee abandons the business?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee must take possession of the APLUS Store and open by the Commencement Date. If Franchisee fails take possession of and open the APLUS Store for business on the Commencement Date, in addition to any other remedies herein provided, Sunoco, at its option, shall have the right to collect, as liquidated damages and not as a penalty, the prorated Minimum Royalty Fee per day for each calendar day you fail to open the APLUS Store for business. In addition, if you fail to take possession of and open the APLUS Store for business within thirty (30) days after the Commencement Date, Sunoco may terminate this Agreement. If this Agreement is terminated pursuant to this Section 5.6, Franchisor shall retain the entire Franchise Fee paid by Franchisee. The Franchise Fee retained shall be specifically understood and agreed by the parties to be in consideration of the services provided, time expended, work performed, and other efforts of Franchisor up to the date of Franchisee's failure to timely commence operations of the Franchised Business and shall not be construed as nor considered to be a penalty.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
Based on the 2024 Aplus Franchise Disclosure Document, Aplus has the right to terminate the franchise agreement if the franchisee fails to take possession of and open the APLUS Store for business within thirty (30) days after the Commencement Date. If Aplus terminates the agreement under these conditions, it retains the entire Franchise Fee paid by the franchisee.
This clause protects Aplus from franchisees who sign agreements but fail to follow through with opening their stores. The retained franchise fee compensates Aplus for the services, time, work, and effort expended up to the point of the franchisee's failure to commence operations. This is a fairly standard practice in franchising, as the franchisor incurs costs in preparing for a new location, regardless of whether it opens.
For a prospective Aplus franchisee, this means it is crucial to be ready to open the store by the commencement date specified in the agreement. Failure to do so not only results in termination of the agreement but also forfeiture of the entire franchise fee. Franchisees should carefully consider their readiness and ability to meet the opening deadline before signing the agreement and paying the franchise fee.