SERVPRO

Date of Incorporation: 1977

Franchising Since: 1969

Headquarters: Gallatin, Tennessee


Business Description: Servpro franchises provide professional residential and commercial cleaning, and restoration of damage caused by fire, flood, and other disasters.


Franchise Offer: The franchisee will operate a Franchise business providing some or all of the following: professional residential and commercial cleaning, deodorization, restoration of premises and contents damaged by fire, flood and other causes, as well as related services such as: duct cleaning; carpet, drapery and upholstery cleaning; construction services; mold mitigation and remediation; carpet sales and installation; carpentry; janitorial services; maintenance and painting, and You will sell related products using the standards, procedures, techniques, processes, and methods of operation developed by Servpro for the Franchise within a specified non-exclusive geographical area under the trade name Servpro, a registered service mark, Servpro and design, and the additional principal service marks, trademarks, trade names, trade dress, logos, emblems, slogans or indicia of origin which are or may be designated by Servpro in the future.


Financial Assistance: Servpro may agree to finance a portion of the franchisee’s acquisition of a franchise, subject to credit approval and meeting the then-current financing criteria. Servpro’s Affiliate, Servpro Finance, LLC, may also agree to provide financing. Servpro may at its discretion, or Servpro Finance, LLC may at its discretion, finance the franchisee’s purchase of additional equipment or vehicles. Servpro does not directly or indirectly offer any financing arrangements to the franchisee except as disclosed above. Whether, and on what terms, the franchisee can obtain financing from ServPro will depend on a variety of factors, including the franchisee’s creditworthiness and the type of security the franchisee can offer. Servpro does not receive any direct or indirect payments for placing financing. Servpro does not guarantee the franchisee’s obligations to third parties.


Training and Assistance: Servpro may require the franchisee and each person actively involved in operation of the Franchise to complete their five step initial training program to their satisfaction, which is called the Business Development Program (BDP). Servpro will provide two owners with the five-step BDP: Step 1: Prerequisite Progress (preparing the business prior to classroom attendance); Step 2. Prerequisite Consultation (on-site Trainer visit); Step 3: New Franchise Training Program (NFTP, 15-day classroom); Step 4: Business Setup (five day on-site Trainer visits); and Step 5: Business Consultations (six on-site Trainer visits). Servpro will provide two owners with the Business Development Program materials. The NFTP fee is waived for two owners. The Mold Remediation Course is required at NFTP. The Mold Remediation training is two days (eight hours each) of instruction. Servpro will provide additional or “refresher” training programs, as well as seminars, regional meetings and related activities regarding the operation of the franchise and the System as Servpro chooses to conduct. Servpro also will hold an annual convention to discuss issues concerning the Franchises and the System.


Territory: The franchisee will not receive an exclusive territory. The franchisee may face competition from other franchisees, from outlets that Servpro owns, or from other channels of distribution or competitive brands that Servpro controls. Servpro, and any of their affiliates, reserve the right to: (i) use other channels of distribution, such as the Internet, retail, catalog sales, telemarketing, or other direct marketing sales, to make sales within the franchisee's territory using the franchisor's principal trademarks; and (ii) make sales within the franchisee's territory of products or services under trademarks different from the ones the franchisee will use under the franchise agreement, all without compensation. A designated franchise operating territory generally contains 50,000 to 80,000 in population.


Term of Agreement and Renewal: The length of the franchise term is five years. The franchisee can renew for additional five-year terms if the requirements are met.

 

Obligations and Restrictions: If the franchisee is an individual or individuals, the franchise is licensed in reliance on his or her business skills, financial capacity, and personal character. If the franchisee is a business entity, the franchise is licensed in reliance on the business skills, financial capacity, and personal character of the principals and owners. The franchisee or principals or owners if the franchisee is a business entity must directly perform or directly supervise operation of the franchise. All majority owners of the franchise must personally complete all franchise business reviews, attend Convention (once per year in the summer), attend all regional meetings (once per year in the winter), attend all area meetings (three times per year or once per trimester), and all training programs required by the franchisor from time to time. The franchisee must offer the goods and services that Servpro designates as required for all franchisees. The franchisee must comply with all applicable laws and regulations, including federal regulations, and obtain all appropriate governmental approvals for the franchise.

 

Estimated Number of Units: 1,600

 

Investment Tables:

Initial Investment:

Name of Fee Low High
Initial Franchise Fee  $42,000 $42,000 plus $467 per 1,000 population over maximum
Vehicle $600 $29,000
Equipment and Products Package $61,250
Supplies $3,100 $7,500
Insurance $3,000 $3,750
Advertising and Promotional $250 $1,500
Training, Travel, Lodging and Food $550 $1,900
Deposits, Permits and Licenses $700 $2,550
Accounting Services, On¬Line Tax Table Service and QuickBooks Pro Training $600 $1,500
Xactimate estimating and pricing software and training $1,000 $2,500
Additional Funds - 3 months $20,000 $25,000
Real Estate - $3,000
Estimated Total $133,050 $181,450 + $467 per 1,000 over maximum population, plus any real estate costs

 

Ongoing Fees:

Name of Fee Amount
Royalty fee Ranges from 3% to 10% of the monthly Gross Volume with a monthly minimum of $100
Fixed Fee $45 - $115 based on the monthly Gross Volume
Advertising Fee 0.5% of the Gross Volume, not including Gross Volume from Subcontract Services, plus 2.5% of the annual Gross Volume on a calendar year basis, not including Gross Volume from Subcontract Services.
Transfer Fee Up to $9,500
Training Fee Servpro will provide initial Training to additional persons or for the franchisee’s employees on a space-available basis at a cost of $1,000 each for the New Franchise Training Program; and $545.00 dollars for attendance at the Mold Remediation Course.
Applied Structural Drying (ASD) Training and Certification The fee can vary from $500 to $1,500 per person for training and $100 for certification by the IICRC, also known as The Clean Trust.
Subrogation Training The fee can vary from $75-$150.
Lead Paint Training and Certification The cost can vary from $550-$1,000
New Training Programs Servpro may charge the then-current training fee, up to $500 per day, for training courses.
Failure to complete BDP Steps 1, 2, and 3 Loss of Convention Allowance and pay minimum royalty and fixed fees
Employee Certification Program Training Manual Fee Servpro may charge the then-current training fee in the amount of $49.95 for the Crew Training Course and $19.95 for other courses.
Convention Registration Fee $375 ($425 late registration fee); $175 guest registration fee ($250 late guest registration fee).
ServproNET Initial hookup to the network using Servpro’s Internet Access Package is included in the Development Fee or Transfer Fee.
Administrative Fee $500 per license
UCC Filing Fee $100 per UCC filed or amended
Resale Referral Fee Up to 5% of gross sales price, including goodwill, equipment and license
Late reports or Late payment $50
Dishonored Checks $50
Examination Servpro’s cost of conducting an examination is $300 per day whether conducted from its offices or the franchisee’s premises, plus lodging and travel costs to and from the franchisee’s location.
Indemnification Servpro’s actual costs
Restocking Fee 15%
Failure to keep records $3,000 per month
Failure to Maintain Insurance Servpro’s actual costs, plus 10% interest or processing fee
Miscellaneous Servpro’s actual costs

Date of FDD: 2012

The above information has been compiled from the FDD of ServPro.

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