Under what grounds can a franchisee terminate the Aplus agreement?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
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- The following replaces the "Summary" section of Item 17(d), titled "Termination by franchisee": You may terminate the agreement on any grounds available by law.
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- The following is added to the "Summary" section of Item 17(v), titled "Choice of forum franchisor", and item 17(w), titled "Choice of law":
The foregoing choice of law should not be considered a waiver of any right conferred upon the franchisor or upon the franchisee by Article 33 of the General Business Law of the State of New York.
FOR THE STATE OF RHODE ISLAND
Section 19-28.1-14 of the Rhode Island Franchise Investment Act ("RIFIA") provides that any provision in the Franchise Agreement and Development Agreement restricting jurisdiction or venue to a forum outside of Rhode Island or requiring the application of the laws of another state is void with respect to claims otherwise enforceable under RIFIA.
FOR THE STATE OF VIRGINIA
In recognition of the restrictions contained in Section 13.1-564 of the Virginia Retail Franchising Act, Item 17.h. of the Franchise Disclosure Document is supplemented by the following:
"Under Section 13.1-564 of the Virginia Retail Franchising Act, it is unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the Franchise Agreement and Development Agreement do not constitute "reasonable cause", as that term may be defined in the Virginia Retail Franchising Act or the laws of Virginia, that provision may not be enforceable."
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, a franchisee's right to terminate the agreement is determined by applicable law. Specifically, for franchisees in New York, all rights and causes of action arising from Article 33 of the General Business Law of the State of New York remain in force. This ensures that the non-waiver provisions of General Business Law Sections 687.4 and 687.5 are satisfied, protecting the franchisee's rights under New York law.
For franchisees in Rhode Island, Section 19-28.1-14 of the Rhode Island Franchise Investment Act states that any provision in the Franchise Agreement and Development Agreement restricting jurisdiction or venue to a forum outside of Rhode Island or requiring the application of the laws of another state is void with respect to claims otherwise enforceable under RIFIA. This means that Rhode Island franchisees retain their rights under Rhode Island law, regardless of what the franchise agreement might say about jurisdiction or choice of law.
For franchisees in Virginia, Item 17.h. of the Franchise Disclosure Document is supplemented by a statement acknowledging Section 13.1-564 of the Virginia Retail Franchising Act, which makes it unlawful for a franchisor to cancel a franchise without reasonable cause. If any grounds for default or termination stated in the Franchise Agreement and Development Agreement do not constitute "reasonable cause" as defined by Virginia law, that provision may not be enforceable. Therefore, Aplus franchisees should be aware of the specific laws in their state that govern franchise termination rights, as these laws will supersede any conflicting terms in the franchise agreement.