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OpenWorks Franchise Cost & Fees

Date of Incorporation: 1987

Franchising Since:  1987

Headquarters: Arizona

Description:
OpenWorks grants franchises for commercial janitorial and other facility service businesses. OpenWorks enters into janitorial and other facility service contracts with commercial clients.

Franchise Offer: OpenWorks will provide franchisees with a starter kit of equipment and supplies at no charge. The franchisee will provide janitorial and other facility services for commercial entities under contracts accepted from OpenWorks. Franchisees are also encouraged to generate additional accounts. To effectively operate an OpenWorks franchise, the franchisee will need to hire personnel. He or she will be responsible for the employees' wages and insurance, and for processing payrolls for them.

Financial Assistance:
The franchisee may finance a portion of the initial franchise fee, or all or a portion of any marketing fee, subject to OpenWorks' discretion and approval. The amount OpenWorks will agree to finance will depend on the size of the transaction, other debt, credit history, and anticipated cash flow. Financing terms are 12% per year.

OpenWorks have an equipment lease program to finance purchases of equipment for use in its franchisees' businesses. OpenWorks are the lender in these transactions. It will finance the entire purchase price of the leased equipment, less a down payment of two month's rent, at an annual interest rate ranging between 15% and 22%.  The lease requires 24 equal monthly payments.

Training and Assistance: OpenWorks will conduct an initial training program in the operation of a Janitorial Service business under OpenWorks' system for the franchisee and any employees who wish to attend at the same time at no charge. It consists of 27 classroom hours and 19 on-the-job hours.

Territory:
Under the Franchise Agreement, OpenWorks grants the right to operate a janitorial and other facility services business within a designated territory using OpenWorks' trade names, marks and system. The franchisee will not receive an exclusive territory, and may face competition from other franchises, from outlets that the franchisor owns, or from other channels of distribution. Other franchisees and OpenWorks can and do compete there.

Term of Agreement and Renewal: The length of the franchise term is 10 years. The successor franchise right permits the franchisee to remain as a franchise after the initial term of the Franchise Agreement expires. If the franchisee wishes to do so, and satisfies the pre-conditions to obtaining a Successor Franchise, the franchisor will offer the right to obtain an additional term of five years.

Obligations and Restrictions: The franchisee or designated manager must use best efforts in the daily operation of the franchised business and devote all productive time and effort to the management and operation of the franchised business on a full time basis. There is no requirement that any designated manager have an equity interest in the franchisee’s business. The franchisee is obligated to offer and sell all the services and only the services that Open Works authorizes the franchisee to provide. There is no restriction as to which customers may be served as long as they are not customers of another Open Works franchisee and are located within the territory.

Total Number of Units:
Number of franchised outlets for year ended 2007: 346

Investment Tables:

Initial Investment:

Name of Fee Low High
Initial Franchise Fee $15,200 $67,500
Background Check Fee $0 $50
Training $0 $500
Uniforms $0 $400
Computer $0 $1,500
Additional
Supplies
(optional)
$0 $500
Additional Equipment (optional) $0 $5,000
Organizational Costs $0 $3,000
Insurance $1,000 $3,000
Additional
Operating Funds
for 3 Months:
$25,000 $25,000
Total $16,200 $106,450

Ongoing Fees:

Name of Fee Amount
Royalties 10% of Gross Revenue
Service Fees 5% of Gross Revenue
Advertising Fund Fee Up to 1% of Gross Revenue
Supplies Current prices (which will be
quoted upon request)
Equipment Current prices (OpenWorks' cost plus a mark-up of up to 25%)
Marketing Fees A multiple of one month's billing on a
new account or on the increase in an
existing account
Background Check Fee Currently $50
Extended Account Guarantee Fee Specified percentage of the Gross Revenue from that Account (currently 6.5%)
Special Project Fees 0% or 15% or 30% of Gross Revenue from job
Initial Training Fee $250 per group
Continuing Training Classes $0 to $150 per class
Cancellation Charge $50
Account Transfer Fee $50 per Account
Franchise Transfer Fee $0 or $2,000
Document Preparation Fee $250
Trouble Call Fee $50 per occurrence, plus current hourly
charge if work performed
Minimum Account Service Fee $75 per month
Insurance Currently 1.98% to 3.6% of Gross Revenue (minimum $85/month)
Workers' Compensation Insurance   
Varies based on state of operation
Bond Currently $6 per month
Supplier Evaluation Open Works' expenses (estimated to range from $100 to $5,000)
Customer Charges Amount customer charges plus $500/day
Indemnification Amount of Open Works' Liabilities
Audit Costs OpenWorks' expenses andThe above information has been taken from the UFOC/FDD of OpenWorks
overhead in connection with an audit of records (estimated to range from $100 to $5,000)
Attorneys' Fees Amount incurred by OpenWorks
Interest on Un-reimbursed Advances 10% per year
Interest on Late Payments Lesser of 21% per year or highest rate allowed by law
Guaranty All obligations
Direct Deposit Fee Up to $15.00 per deposit

 


The above information has been taken from the UFOC/FDD of OpenWorks

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