Under the Aplus franchise agreement, what entities qualify as a 'Business Entity'?

According to Aplus's 2024 Franchise Disclosure Document, a 'Business Entity' is defined as any person or entity with the power to enter into contracts, excluding natural persons. This definition is important because various aspects of the franchise agreement may apply differently to business entities compared to individual franchisees. For example, the FDD specifies conditions for transferring franchise agreements to business entities and requirements related to equity offerings if the franchisee is a business entity.

The definition explicitly includes corporations, limited liability companies (LLCs), limited partnerships, and trusts. This means that if a franchisee chooses to operate their Aplus store under one of these structures, they will be considered a 'Business Entity' under the terms of the franchise agreement. This distinction can affect obligations such as providing personal guarantees from the owners of the business entity.

For prospective Aplus franchisees, understanding this definition is crucial when deciding how to structure their business. If operating as a business entity, franchisees should pay close attention to sections of the franchise agreement that address business entities specifically, such as those concerning transfer conditions or equity offerings. Consulting with a legal and financial advisor is recommended to determine the most suitable business structure and to fully understand the implications of being classified as a 'Business Entity' under the Aplus franchise agreement.