Under what conditions does Aplus consider a transfer fee to be applicable when a second transfer of the premises occurs within 10 years of a major capital spend?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
ransfer Consideration with a minimum of $15,000 | | Year 2 | 45% of the Transfer Consideration with a minimum of $15,000 | | Year 3 | 40% of the Transfer Consideration with a minimum of $15,000 | | Year 4 | 30% of the Transfer Consideration with a minimum of $15,000 | | Year 5 | 25% of the Transfer Consideration with a minimum of $15,000 | | Year 6 | 20% of the Transfer Consideration with a minimum 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, a transfer fee is applicable when a second transfer of the premises occurs under specific conditions related to capital expenditure and prior transfer fees. Specifically, if a second transfer occurs within ten years of a major capital spend exceeding $400,000, Aplus will charge a transfer fee.
The transfer fee in this instance is set at ten percent of the total transfer consideration. However, this only applies if Aplus received a transfer fee during the first transfer of the premises. This condition ensures that Aplus benefits from the increased value or activity at the location due to the capital improvements.
It's important to note that under certain circumstances, Aplus may reduce the transfer fee to no less than $1,500. These circumstances include transfers from a sole proprietor to a wholly-owned corporation, transfers to a corporation where the franchisee holds a majority share, transfers of minority stock in a corporation where one shareholder retains majority control, dissolution of a two-partner partnership or two-shareholder corporation, and corporate name changes. These exceptions provide some flexibility for franchisees undergoing structural changes in their business ownership.