Under a Development Agreement, what right does Aplus grant to the developer?

According to Aplus's 2024 Franchise Disclosure Document, a Development Agreement grants the developer the right to develop and operate a specified number of Aplus stores within a defined development area. This area is detailed in Attachment B of the Development Agreement and can be defined by cities, counties, states, or other designations.

However, Aplus retains significant rights within and outside the development area. Aplus reserves the right to operate or franchise Aplus stores outside the developer's designated area, regardless of proximity. Aplus also maintains the right to operate stores and license the use of its marks and system in "Captive Markets" both within and outside the development area. Additionally, Aplus can distribute products and services identified by its marks through alternative channels, including the Internet, without compensating the developer, even if these activities occur within the developer's area.

It is important to note that the Development Area is non-exclusive, meaning Aplus can grant other parties or affiliates the right to operate Aplus stores within the same Development Area. Furthermore, Aplus is not restricted from owning, acquiring, operating, or franchising other businesses under different trademarks, even if they compete with Aplus stores. These retained rights and non-exclusivity significantly impact the scope and potential profitability of the development agreement for the franchisee.

If a developer fails to meet their obligations under the development agreement, Aplus has the right to modify or terminate any territorial protections, reduce the size of the development area, or decrease the number of Aplus stores the developer is allowed to establish. This underscores the importance of adhering to the development schedule and other contractual obligations to maintain the agreed-upon development rights.