Under what conditions are Aplus franchisees prohibited from engaging in competitive business activities after termination of the franchise agreement?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or other agreement | Summary | |
|---|---|---|---|
| q. | Non-competition covenants during the term of the franchise | No provision | There is no covenant by either party not to compete. |
| r. | Non-competition covenants after the franchise is terminated or expires | APLUS - 7 | In the event you or any owner is in default which has led to premature termination of the franchise agreement, you and any owner are prohibited from owning an interest in, investing in, managing, operating, or performing services, consulting with, or be employed by or for any competitive business located within 20 miles of your APLUS Store or any other APLUS Store, for two years after termination or expiration of the franchise agreement. Excepted from this restriction are any competitive businesses owned by you or an affiliate at the time of termination of the franchise agreement. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 53–64)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, a non-competition covenant applies after the franchise is terminated or expires, but only under specific conditions. If a franchisee or any owner is in default, leading to premature termination of the franchise agreement, they are restricted from involvement with any competitive business. This restriction includes owning an interest in, investing in, managing, operating, or performing services for a competitive business.
The geographic scope of this restriction extends to a 20-mile radius around the franchisee's Aplus store or any other Aplus store. The duration of the non-compete is two years following the termination or expiration of the franchise agreement.
However, there is an exception to this non-compete clause. The restriction does not apply to any competitive businesses that the franchisee or an affiliate already owned at the time the franchise agreement was terminated. This means that if a franchisee already had a competing business before signing the Aplus franchise agreement, that pre-existing business is exempt from the post-termination non-compete restrictions.