Under what conditions can Sunoco require a larger Collateral Security Deposit or additional security from an Aplus franchisee?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
part of any present, past, or future obligation indebtedness, or liability of you to Sunoco. You agree to enter into any additional financing statements, security agreement, or other documents deemed necessary by Sunoco. Further:
- 3.4.1. You shall pay to Sunoco a Collateral Security Deposit in an amount determined by Sunoco and no less than Ten Thousand Dollars ($10,000) or another amount stated in Attachment 1, which is due and payable prior to the opening of the APLUS Store.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, Sunoco has the discretion to require a larger Collateral Security Deposit or additional security from a franchisee both before the store opens and at any point during the contractual period. The initial Collateral Security Deposit will be no less than $10,000 or another amount stated in Attachment 1.
This means that Sunoco can increase the financial burden on franchisees if they deem it necessary. This could be due to a variety of factors, such as concerns about the franchisee's financial stability or changes in the overall economic climate. Aplus also requires the franchisee to execute and deliver additional and updated financing statements, security agreements, or other documents.
It is important for prospective Aplus franchisees to understand that the amount of the Collateral Security Deposit is not fixed and can be increased by Sunoco. Franchisees should carefully consider their financial resources and risk tolerance before investing in an Aplus franchise, as they may be required to provide additional security at some point during the term of the franchise agreement. Franchisees should also note that the amount of the Collateral Deposit may be changed, substituted, reduced or increased at any time by mutual agreement of Sunoco and the franchisee.