Under what circumstances can the Aplus transfer fee be reduced to a lesser amount, but not less than $1,500?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
mum of $15,000 | | Year 7 | 15% of the Transfer Consideration with a minimum of $15,000 | | Year 8+ | 10% of the Transfer Consideration with a minimum of $15,000 |
The Transfer Fee shall be ten percent (10%) of the Transfer Consideration where:
- (i) a second (or third, etc.) transfer of the applicable Premises occurs during the ten (10) year period from the major capital spend (i.e. capital in excess of four hundred thousand dollars ($400,000), and
- (ii) Franchisor received, in connection with the first transfer, the transfer fee per the above schedule.
Under the following circumstances, the Transfer Fee may be reduced to a lesser amount, but in no event less than one thousand five hundred ($1,500.00) dollars:
- (a) Transfer from a sole proprietor to a wholly owned corporation in which 100% of the shares of the corporation are held by the former sole proprietor;
- (b) Transfer to a corporation where there are only two (2) shareholders and you will be the 51% shareholder;
- (c) Transf
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, the transfer fee may be reduced to no less than $1,500 under specific circumstances. These circumstances primarily involve changes in the ownership structure of the franchisee's business, such as transferring from a sole proprietorship to a wholly-owned corporation, or transfers involving corporations with specific shareholder arrangements.
Specifically, the transfer fee can be reduced when a sole proprietor transfers the franchise to a corporation they wholly own, where they hold 100% of the shares. It also applies to transfers to a corporation with only two shareholders, where the franchisee will hold 51% of the shares. Another scenario is the transfer of minority stock in a corporation with multiple shareholders, provided one shareholder retains a 51% majority.
Additionally, the transfer fee may be reduced in the event of the dissolution of a two-partner partnership or a two-shareholder corporation, resulting in one of the former partners or shareholders continuing as a sole proprietor. Finally, a reduction may be granted for a corporate name change, contingent on the franchisee providing detailed reasons for the change and any additional information required by Aplus, and receiving Aplus's consent. These provisions offer some flexibility for franchisees undergoing structural changes in their business while still ensuring Aplus receives a minimum transfer fee of $1,500.