Under what circumstances can Aplus terminate the Franchise Agreement without providing an opportunity to cure?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
16.2. Termination by Franchisor
- 16.2.1. The following constitute incurable defaults under the Franchise Agreement. If any of the following occur, Franchisor shall have the right to terminate this Agreement, without providing Franchisee an opportunity to cure. Termination shall be effective upon delivery of notice of termination.
- (a) Franchisee fails to timely establish, equip, and commence operations of the Franchised Business pursuant to Section 5;
- (b) Franchisee fails to have its Designated Manager satisfactorily complete any training program pursuant to Section 8;
- (c) Franchisee fails to maintain all required professional licenses, permits and certifications for a period exceeding five (5) business days;
- (d) Franchisee made any material misrepresentation or omission in its application for the Franchise or otherwise to Franchisor in the course of entering into this Agreement;
- (e) Franchisee or any Owner is accused of a fraudulent, deceptive or illegal practices, or is convicted of or pleads no contest to, felony, a crime involving moral turpitude, or any other crime or offense that Franchisor believes is reasonably likely to have an adverse effect on the System, or Franchisee or Owner is involved in any other activity that otherwise may adversely affect the reputation of Franchisor, Franchisee, or the Franchised Business;
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, there are several specific instances where Aplus can terminate the Franchise Agreement immediately, without offering the franchisee a chance to correct the issue. These are considered "incurable defaults."
The first incurable default involves failing to establish, equip, and commence operations of the franchised business as outlined in Section 5 of the agreement. This means if the franchisee doesn't get the store up and running on time and according to Aplus's standards, the agreement can be terminated. Another incurable default is failing to have the Designated Manager satisfactorily complete any required training programs as per Section 8. This highlights the importance Aplus places on proper training and management.
Further, Aplus can terminate the agreement without a cure period if the franchisee fails to maintain all required professional licenses, permits, and certifications for more than five business days. This emphasizes the franchisee's responsibility to stay compliant with all legal requirements. Additionally, any material misrepresentation or omission made by the franchisee in their application or during the process of entering into the agreement is grounds for immediate termination. Finally, if a franchisee or any owner is accused of fraudulent, deceptive, or illegal practices, or is convicted of a felony or any crime that Aplus believes could negatively impact the system, Aplus can terminate the agreement without allowing an opportunity to cure the issue.
These termination conditions underscore the importance of fulfilling all obligations and maintaining ethical and legal compliance to avoid immediate termination of the Aplus Franchise Agreement. Franchisees should carefully review these conditions and ensure they can meet all requirements to protect their investment and franchise rights.