Under the Aplus franchise agreement, what document are holders of a five percent (5%) or greater interest in the Franchisee required to execute to assume the Franchisee's obligations?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisor has the right to require any holder of a legal or beneficial interest in Franchisee (and any member of their immediate families or households), and any officer, director, executive, manager, or member of the professional staff and all employees of Franchisee to execute a nondisclosure agreement, in a form the same as or similar to the Non-Disclosure Agreement attached as Attachment 2, upon execution of this Agreement or prior to each such person's affiliation with Franchisee. Upon Franchisor's request, Franchisee shall provide Franchisor with copies of all Non-Disclosure agreements signed pursuant to this Section 7.4. Such agreements shall remain on file at the offices of Franchisee and are subject to audit or review as otherwise set forth herein. Franchisor shall be a third party beneficiary with the right to enforce covenants contained in such agreements.
Source: Item 23 — RECEIPT (FDD pages 68–302)
What This Means (2024 FDD)
Based on the 2024 Aplus Franchise Disclosure Document, the document that holders of a legal or beneficial interest in the franchisee must execute is a nondisclosure agreement. Specifically, Aplus has the right to require any holder of a legal or beneficial interest in the franchisee (and any member of their immediate families or households), and any officer, director, executive, manager, or member of the professional staff and all employees of franchisee to execute a nondisclosure agreement. This agreement must be in a form the same as or similar to the Non-Disclosure Agreement attached as Attachment 2.
This requirement is triggered upon the execution of the Franchise Agreement or prior to each such person's affiliation with the franchisee. Aplus requires that the franchisee provide copies of all Non-Disclosure agreements signed, and these agreements must remain on file at the franchisee's offices, subject to audit or review.
Aplus is established as a third-party beneficiary with the right to enforce the covenants contained within these nondisclosure agreements. This ensures that Aplus can protect its confidential information and trade secrets by holding all relevant parties accountable through legally binding agreements.