Under the Aplus franchise agreement, what is considered a 'cross default'?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section in franchise or other agreement | Summary |
|---|---|---|
| or | ||
| similar | ||
| state | ||
| laws; | ||
| or | ||
| has | ||
| outstanding | ||
| judgments against it or any Owner for over 30 | ||
| days, (xxiii) any default under any agreement | ||
| between you and us or our Affiliate (cross | ||
| defaults) (xxiv) failure on 2 or more separate | ||
| noticed occasions to comply with the same | ||
| obligation in any time-frame, and (xxv) receive | ||
| two or more default notices within 12 month time | ||
| frame | ||
| for | ||
| any | ||
| violation | ||
| of | ||
| the | ||
| franchise | ||
| agreement or the System Standards. |
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 'cross default' occurs when a franchisee defaults under any agreement between them and Aplus or its affiliates. This is explicitly mentioned as a non-curable default, meaning that Aplus can terminate the franchise agreement immediately without providing an opportunity for the franchisee to correct the default.
For a prospective Aplus franchisee, this means that any breach of any agreement with Aplus, no matter how small, could trigger a termination of the franchise. This includes not only the franchise agreement itself but also any other agreements such as leases, loan agreements, or supply contracts.
This provision is more stringent than some franchise agreements, which may allow for a cure period or only consider defaults under the franchise agreement itself as grounds for termination. Therefore, it is crucial for Aplus franchisees to meticulously adhere to all terms and conditions of every agreement they have with Aplus to avoid the severe consequence of franchise termination due to a cross-default.