Spherion
Date of Incorporation: 1999
Franchising Since: 1956
Headquarters: Fort Lauderdale, Florida
Country: U.S.
Description: The principal business of the franchisor, Spherion Staffing LLC, is staffing through identifying, recruiting, assessing and deploying talent for a wide variety of businesses. Services are organized into two business segments, Staffing Services and Professional Services. These segments provide a range of workforce solutions including temporary staffing, managed services, and permanent placement.
Franchise Offer: Under the franchise program the franchisee will provide the franchised services within a specified area. The franchisee will develop and support customers, applicants for permanent placement and temporary employees on the franchisors behalf using their trademarks, service marks, trade names, procedures, techniques, and the goodwill associated with them. The customers, applicants for permanent services, and temporary employees belong to the franchisor. The franchisor will pay the franchisee a commission calculated as a percentage of gross profit from the franchisee's sales.
Financial Assistance: Generally, the franchisee must secure the initial and continuing capital from his or her own sources. The franchisee should note that because of the structure of the franchise Spherion has Spherion, in effect, finances the temporary payroll since Spherion pays the temporaries then bills the clients. In addition, subject to the franchisor’s prior approval, they will finance all or part of the cost of the franchisee’s Computer System (a "Computer System Purchase Loan"). If the franchisee chooses for the franchisor to finance this purchase, the franchisee will repay the amount financed in equal monthly payments over 36 months with interest at the Prime Rate as published in The Wall Street Journal (the "Prime Rate") on the date of the loan.
Training and Assistance: The franchisor will provide the franchisee with mandatory training. The franchisor provides role based training for one or more of the franchisee’s representatives. This training will be provided through a combination of the franchisor’s systems, manuals, phone based or in person at either the franchisee’s office location or at the divisional headquarters in Atlanta or the corporate headquarters in Fort Lauderdale and at a designated training branch. The franchisee must successfully complete the training program.
Territory: The Franchise Agreement will define the Area in which the franchisee will conduct their business. Except under unusual circumstances, the franchisee’s area will consist of a political jurisdiction such as a city, county, parish or township, or multiple contiguous political jurisdictions in one or more states. The franchisee’s area will be exclusive in that the franchisor will not establish or maintain, or authorize any other person or firm to establish or maintain, an office location within the area to provide services which the Franchise Agreement authorizes, as long as the franchisee abides by the Franchise Agreement, except in situations as described within the franchisor’s FDD.
Term of Agreement and Renewal: The term of the franchisee agreement is 10 years. Renewal terms are for an additional five years under the then current franchise agreement form.
Obligations and Restrictions: The franchisee must devote full time and best efforts to the business. The franchisee must successfully complete all required training. If the franchisor permits the franchisee to devote less than full time and effort to the business, the franchisee must have a full time manager and a full time client service representative, whom the franchisor must approve in advance and who must successfully complete the required training. The franchisee may offer their customers only the services authorized by the Franchise Agreement.
Total Number of Units: Approximately 600 locations.
Investment Tables:
Initial Investment:
| Name of Fee | Low | High |
|---|---|---|
| Initial Franchise Fees | $25,000 | $25,000 |
| Computer System | $3,650 | $5,750 |
| Real Property | $1,000 | $3,200 |
| Leasehold Improvements, Furniture and Fixtures | $7,500 | $15,500 |
| Equipment | $4,650 | $10,500 |
| Opening Advertising | $1,050 | $5,150 |
| Training Expenses | $1,050 | $3,100 |
| Start-up Supplies | $510 | $1,050 |
| Insurance | $2,100 | $7,850 |
| Utility Expenses | $160 | $1,100 |
| Professional Fees | $1,050 | $5,200 |
| Business Franchises | $160 | $1,100 |
| Hardware Installation | $720 | $1,100 |
| Additional Funds for 12 months | $51,500 | $82,500 |
| TOTAL | $100,000 | $168,000 |
Ongoing Fees:
| Name of fee | Amount |
|---|---|
| Temporary Sales Fee | Spherion pays the franchisee their commission on (and Spherion retains the balance of) the Temporary Gross Profits according to the Gross Profit Percentage for the Accounting Period. Normally the franchisor pays franchisees 75% and retains 25% of the Temporary Gross Profits. Please see additional information within Spherion’s FDD. |
| Full-Time Placement Fee | Spherion pays the franchisee an 88% commission on (and Spherion retains the 12% balance of) the Full-Time Placement Sales in each Fiscal Year. "Full-Time Placement Sales" means the U.S. Dollar equivalent of all billings (whether collected or not) during an Accounting Period for all fees due from Full-Time Placements and retainer searches, including any liquidated damages and buy-outs relating to those Temporary Employees and excluding only sales taxes or other taxes which the franchisee is required by law to collect from customers in connection with the services provided, and less any refund(s) or adjustment(s) given during that same Accounting Period. "Fiscal Year" means the 12 Accounting Periods currently beginning on or about January 1 of any year and ending on or about December 31 of such year, or any other period consisting of 12 Accounting Periods which Spherion establishes as their fiscal year. |
| Computer System Support Fee | $200 per site (subject to change on 30 days notice) |
| Management Information Services and Technology Enhancement Fee (MISTEF) | Spherion will begin providing on-line electronic data processing services at the time the franchisee opens his or her office. The franchisee will pay Spherion the Management Information Services and Technology Enhancement Fee (MISTEF) at the rate of 1.5% of the total gross payroll for Temporary Employees plus 1.5% of Full-Time Placement Sales in each Accounting Period. This fee covers full access and use of Spherion's software for payroll processing and customer billing, back-up and data maintenance services, payroll checks, direct deposit and debit card transactions, time and payroll data entry and all accounts receivable. Currently, the franchisor pays the Monthly Communication and Connectivity Charges for the on-line electronic data processing. This practice may change in the future. |
| Prove It! maintenance fee | Not currently passed on, but at this time the license fee is $460 per site plus 6% Florida sales tax; and is subject to vendor increases |
| Gross Profit Quota Fee | Will vary under circumstances |
| National Advertising Fee | .25% of Sales |
| Local Advertising Expenditure | .5% of Temporary Sales and Full-Time Placement Sales made during the previous Fiscal Year |
| Reimbursement For Direct Mailings | The franchisor's costs for production and postage |
| Accounts Receivable Funding Fee on Accounts Receivable over 60 days old | The franchisor will reduce the franchisee’s commission by an Accounts Receivable Funding Fee, based on accounts receivable which are more than 60 days old at the end of each Accounting Period. The rate is calculated by multiplying the variable annual rate (which is the Prime Rate of interest quoted on the first business day of each Accounting Period in the Southeastern Edition of the Wall Street Journal plus one-and-a-half percentage points by 30/365 with the result multiplied by the amount over 60 days ([Prime Rate + 1.5%] x 30/365 x AR over 60 days). |
| Uncollectible Customer Billings | Will vary under circumstances |
| Temporary Employee Wages | Will vary under circumstances |
| Area Expansion | $6,000 per county or parish |
| Purchases from franchisor or their affiliates | Will vary under circumstances |
| Release from non competition covenants | If the franchisee terminates the Franchise Agreement without cause after the initial term, the franchisee must provide us notice that he or she: (a) will discontinue operating the Franchised Business and abide by the non competition provisions in the Franchise Agreement; or (b) request Spherion to exercise their option described in Section 15(c) of the Franchise Agreement. |
| Indemnification | Will vary under circumstances |
| Materials or courses for additional (post initial) training | Will vary depending on what is provided |
| Transfer fee | Ranges between $5,000 - $10,000 |
Date of FDD: 2011
The above information has been compiled from the FDD of Spherion along with online sources.
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