Under what conditions is the Aplus transfer fee reduced when transferring ownership?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
Note 3: With respect to any of the following types of transfer, the Transfer Fee shall be reduced:
- (1) Transfer from a sole proprietor to a Corporate Entity in which 100% of the shares or ownership interest of the Corporate Entity is held by the former sole proprietor.
- (2) Transfer to a Corporate Entity where there are only two Owners and you will be the 51% Owner.
- (3) Transfer of the minority stock of a Corporate Entity with multiple Owners with one Owner being the 51% majority Owner. One person must retain 51% ownership of the Corporate Entity.
- (4) The dissolution of a two-partner partnership or a two-Owner Corporate Entity resulting in one of
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the former partners or Owners remaining as a sole proprietor
(5) Corporate name change (only) subject to our receipt of all information we require to evaluate the request.
Source: Item 6 — OTHER FEES (FDD pages 16–28)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, the transfer fee may be reduced under specific conditions. These include scenarios where the transfer is for convenience of operation, such as a transfer from a sole proprietor to a wholly-owned corporate entity, or to a corporate entity with only two owners where the original franchisee retains 51% ownership. Additionally, a transfer of minority stock within a corporate entity where one owner maintains 51% majority ownership, or the dissolution of a two-partner partnership resulting in one partner becoming a sole proprietor, may also qualify for a reduced transfer fee. A corporate name change may also result in a reduced transfer fee, pending Aplus's approval of the request and receipt of all required information.
For transfers of a leased Aplus store, the transfer fee is also dependent on the capital Aplus spent on major projects at the premises within the 10 years prior to the transfer. If the capital spent is equal to or less than $400,000, the transfer fee will be the greater of 10% of the Transfer Consideration, or $15,000. If the capital spent is greater than $400,000, the transfer fee is determined by the number of years since the capital spending occurred.
For both leased and non-leased Aplus stores, the transfer fee is a percentage of the Transfer Consideration with a minimum of $15,000, and this percentage decreases as the years since capital spending increase. For example, if the transfer occurs within one year of the capital spending, the transfer fee is 50% of the Transfer Consideration with a minimum of $15,000. If the transfer occurs eight or more years after the capital spending, the transfer fee is reduced to 10% of the Transfer Consideration with a minimum of $15,000.
Prospective franchisees should carefully review these conditions and consider how they might affect future transfer scenarios. Understanding these conditions can help in planning for business transitions and minimizing potential costs associated with transferring ownership. It is also important to note that Aplus retains the right to evaluate each transfer request and may require additional information to determine eligibility for a reduced transfer fee.