American Tire Depot
Date of Incorporation: April 1, 2001
Franchising Since: 2001
Address: California
Description: American Tire Depot is offering the opportunity to franchise a store that sells, at retail and wholesale, tires, wheels and other automotive related products to the public.
Franchise Offer: The Franchisor provides two basic franchise plans:
i) Existing Store Plan: The Franchisor provides a completely operational store prior to the franchisee taking control of the store
ii) Franchise New Location Plan: The Franchisor and the Franchisee work together to convert an independent retail tire or automotive related store owned and operated by the prospective franchisee into a new American Tire Depot store.
Financial Assistance: The franchisor does not offer, either directly or indirectly, any financing arrangements to franchisees. However, the franchisor may grant an individual credit line to purchase inventory from the franchisor depending on the credit and financial qualifications of the franchisee.
Training and Assistance: The training program is conducted after the signing of the franchise agreement, normally sometime between six months and six weeks prior to the opening of the franchise store. The training program is conducted at the “American Tire Depot" store or other designated training facility by the franchisor. The training consists of basic fundamental sales, services, and operational techniques for a tire, brake, wheel alignment, and front end repair service center. Presently, the initial training fee is $500.00 per day for in-store training.
Territory: The Franchisor does not grant nor will it establish an exclusive territory to franchisees.
Term of Agreement and Renewal: Length of Term of Franchise Agreement is 10 years. The Franchise Agreement can be renewed for another 10 years if the franchisee is in good standing. The franchisor can terminate only if the franchisee is in default.
Obligations and Restrictions: If the franchisee is an individual, then the franchisee must directly supervise the franchised business. If the franchisee is a corporation the direct, on-site supervision must be done by a person who owns more than 51%. The franchisee must sell all the products and services required by the franchisor. Furthermore the franchisee is prohibited from offering or selling any products or services not authorized by the franchisor, and from using the premises for any other purpose than the operation of the franchise store.
Total Number of Units: There were 4 franchised units at the end of the year 2006.
Financial Statements: Net income of $38,332 at the end of the financial year 2005.
Investment Table:
i) Estimated Initial Investment
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee (includes initial training) | $25,000 | $75,000 |
| Equipment | $65,000 | $ 100,000 |
| Beginning Inventory | $180,000 | $240,000 |
| Leasehold Im¬provements | $7,500 | $10,000 |
| Rent Deposits | $7,500 | $10,000 |
| Working Capital | $15,000 | $525,000 |
| Grand Opening/Initial Advertising | $5,000 | $10,000 |
| Computer Hardware & Software | $7,500 | $10,000 |
| Internet Domain Site/ Participation | $2,500 | $7,500 |
| Signs | $2,500 | $7,500 |
| Initial Ins. Fee | $2,500 | $53,500 |
| Initial Payroll | $5,000 | $10,000 |
| Miscellaneous | $5,000 | $35,000 |
| Total (This does not include real estate costs) | $330,000 | $1,093,500 |
ii) Ongoing Fees
| Name of Fee | Amount |
|---|---|
| Royalty | 2% of total sales or minimum of $2000, whichever is greater |
| Advertising | 4% of total gross sales or a minimum of $5,000.00, whichever is greater |
| Local Advertising | Minimum of 1% of total Gross Sales |
| Additional Training | $500/day for In Store |
| Assignment Of Franchise | 50% of initial Franchise fee charged by franchisor |
| Audit | Cost of Audit + 20% Penalty on amount under¬stated, along with 10% interest per year |
| Renewal | 35% of the then Franchisee-offered initial franchise fee |
| Computer POS | $450 |
The above information has been taken from the UFOC/FDD of the American Tire Depot.
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