Automotive Service
Date of Incorporation: November 13, 1998
Franchising Since: February of 1999
Address: Washington
Description: Automotive Service Franchising offers a franchise for operating an automotive repair service business that performs diagnostic inspections, replaces and repairs airbag systems, steering column assemblies, dashboard assemblies, seat assemblies, interiors and electronic systems and performs certain other related automotive interior repairs to the general public and the automotive industry.
Franchise Offer: Automotive Service Franchising offers one type of franchise. The franchisee will operate the franchised business from mobile service vehicles and a fixed site location within a Territory.
Financial Assistance: The franchisor does not offer direct or indirect financing. The franchisor does not guarantee note, lease or obligation. The franchisor currently does not intend to sell, sign or discount any note, contract or other instrument.
Training and Assistance: The mandatory training program will take place at the headquarters in Washington, or at another location. The duration is normally 3 weeks and the franchisor will provide this initial training for two people. The franchisee must pay for all the travel expenses and accommodations incurred during training. The franchisor may hold mandatory training courses every year to update technicians and office managers concerning new safety systems, changes in the industry, improved procedures, repair methods, parts and tools. The franchisee needs to attend only one supplemental training course per year.
Territory: The franchisee will be granted a limited exclusive Territory. The territory encompasses a geographic area that currently has a population of the approximate size associated with the variable franchise fee. Within the Franchise Territory, the franchisor will not: (i) establish a fixed location for automobile airbag repair or replacement service or any other related automotive interior repair services, whether company-owned or franchised, or (ii) solicit customers for providing auto airbag service.
Term of Agreement and Renewal: The term of the Franchise Agreement is 10 years and renewal or extension of the term is for 10 years. Requirements to renew or extend the franchise agreement are; give notice, be in compliance with all agreements, sign new agreement similar to the then-current form, pay fee, sign release and fully comply.
Obligations and Restrictions: The franchisee must participate personally in the business. The franchisee may not simultaneously work for or own any other business unless the franchisor consents to it. The franchisee must be open for business continuously during the reasonable and customary hours for franchise businesses in the automotive services industry in the location. To maintain uniform quality standards, the franchisee must follow the franchisor’s directions concerning the services and products. The franchisee may sell only those approved goods and services consistent with the image and product line as the franchisor has expressly approved it
Total Number of Units: 29 franchised stores at the end of the financial year 2005
Financial Statements: Net income loss of $109,530
Investment Table:
Initial Investment:
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fee | $20,000 | $35,000 |
| Software License Agreement Initial Fee | $1,600 | $1,600 |
| Rent | $3,000 | $7,500 |
| Travel Expenses for Training | $1,500 | $4,000 |
| Real Estate Leasehold Improvements | $0 | $2,500 |
| Labour per Certified Technician (estimated 3 month expense) | $0 | $10,500 |
| Vehicle lease or purchase (Van or Truck with Canopy) | $900 (including a Down Payment & Monthly Payments for 3 months) | $1,800 (including a Down Payment & Monthly Payments for 3 months) |
| Vehicle Set-up; Signage, Inverter, Alarm system, Parts Bins, Tool Cart Rack, Battery conversion and Misc |
$1300 | $2,500 |
| Computer, Printer, Peripherals and software | $2500 | $4,500 |
| Scan Tools and Diagnostic Equipment | $10,000 | $16,000 |
| Cart and Tool Box with Logo, Hand Tools, Power Tools, Jack, Stands, and Misc. Repair Equipment | $1,000 | $6,500 |
| Service Information Manuals and Supplemental Repair information | $800 | $1,500 |
| Uniforms; Shirts Hats & Coats as specified in Operations Manual | $100 | $600 |
| Administrative Package; Letterhead/ Envelopes, Forms, Invoices, Office Supplies, Telephones, Fax Machine, Ceil Phone and Live Answering Service (estimated three month expense) | $500 | $2,000 |
| Legal and Accounting, Corporate Set-up and Review | $500 | $2,000 |
| Insurance: Business, Liability, Equipment and Vehicles (estimated three month expense) | $1,500 | $2,000 |
| Business Licenses and Permits (annual) | $100 | $500 |
| Advertising Campaign; Yellow Pages, Local Ads, Direct Mailers, Radio Spots and Press Releases, Membership in Trade Associations; Automotive Service Association, Local Auto body Associations, etc. (estimated three month expense) | $1,500 | $3,000 |
| Facility requirements; signage, decor and equipment | $500 | $1,000 |
| Additional Funds for first 3 months | $3,000 | $9,000 |
| Total | $50,300 | $114,000 |
Ongoing Fees:
| Name of Fee | Amount |
|---|---|
| Royalty | 8.5% of Gross Profit but a minimum ranging from $225 to $625/month after 1 year of operation and $225 to $1250/month after two years of operations; reduced to 5% until the end of any calendar year after pay $50,000 during that calendar year |
| Advertising Fee | 2% of Gross Profit |
| Minimum Advertising | 5% of the first $10,000 of monthly Gross Profits, and 2.5% of monthly Gross Profits above $10,000 |
| Monthly Software Maintenance and Support | $100/month for the 1st CPU, $50/month each additional CPU |
| Additional Training | $250/person/ day |
| Interest and Late Charges | 5% of overdue amount and 18% on past due amounts |
| Audit Fees | Cost of Audit |
| Transfer fees (Training fee, Software fee, administration and Start-up Support) | $10,500 |
| Renewal Fee | $5,000 |
| Fees on Default and Indemnity | All amounts due |
| Insurance | Varies |
| Fees Upon Sale of Securities | $5,000 |
The above information has been taken from the UFOC/FDD of Automotive Service Franchising.
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