Under what conditions can the Aplus franchisor terminate the Development Agreement with cause?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
HIP FRANCHISE AGREEMENT AND RELATED AGREEMENTS**
| Provision | Section in | Summary | |
|---|---|---|---|
| Development Agreement | |||
| a. Length of the Agreement term | Section 2.1 | The period beginning on the effective date and ending on the earlier of: (i) the date on which you have completed your development obligations, or (ii) 12:00 midnight CST on the last day specified in the development schedule. | |
| b. Renewal or extension of the | No provision | Not applicable. | |
| term | |||
| c. Requirements for Developer | No provision | Not applicable | |
| to renew or extend | |||
| d. Termination by Developer | No provision | Not applicable | |
| e. Termination by the | No provision | Not applicable | |
| franchisor without cause | |||
| f. Termination by the franchisor with “cause” | Sections 9.1, 9.2., 9.3, 9.4, 9.5, and 9.6 | We can terminate if you materially default under your development agreement, an individual franchise agreement, or any other agreement between you or your affiliate and us. In the event of the death or permanent incapacity of an owner, we may terminate if you fail to adhere to the applicable transfer requirements. | |
| g. |
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, the franchisor can terminate the Development Agreement with cause under several conditions. These conditions are outlined in Sections 9.1, 9.2, 9.3, 9.4, 9.5, and 9.6 of the Development Agreement. Aplus can terminate the agreement if the developer materially defaults under the Development Agreement, an individual franchise agreement, or any other agreement between the developer (or their affiliate) and Aplus. Additionally, in the event of the death or permanent incapacity of an owner, Aplus may terminate the agreement if the developer fails to adhere to the applicable transfer requirements.
Certain defaults can be cured, meaning the developer has an opportunity to correct the issue and prevent termination. Specifically, a failure to pay fees can be cured within 10 days, and any other default can be cured within 30 days. This includes breaches or defaults in the performance of obligations under any franchise agreement or other agreement between the developer and Aplus.
However, some defaults are considered non-curable, meaning they cannot be corrected and will result in immediate termination. These non-curable defaults include unapproved transfers, failure to meet development obligations, any breach of confidentiality or unfair competition, cross defaults, bankruptcy, foreclosure, insolvency, conviction of a felony, misrepresentations in the application, and/or repeated defaults, even if previously cured. This means that Aplus franchisees need to be aware of all the ways they can be in default of the agreement and what actions can be taken to remedy the situation, if possible.