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American Leak Detection Franchise Cost & Fees

Date of Incorporation: 1974
Franchising Since: 1985
Headquarters: Palm Springs, California

Business Description: The franchisor is American Leak Detection, Inc. The basic business to be conducted by the franchisee is leak detection services, together with related repair and other services. Services to be offered by the franchisee include water, gas, pool, spa, sewer leak and other detection and repair, and pipeline location. The franchisee will detect plumbing leaks hidden by concrete slabs, asphalt, earth, walls and other concealed areas and utility lines. The general market for the services will be swimming pool and spa owners and residential and commercial property owners with hidden leak problems. As the business develops, the franchisor may authorize the franchisee to offer leak correlation services for main distribution lines to municipalities, water districts (both rural and urban), industrial estates and other such customers.

Franchise Offer: The franchisee will operate an American Leak Detection business, a business which offers leak detection services, together with related repair and other services under the name “American Leak Detection.”

Financial Assistance: American Leak Detection does not offer financing nor do they place financing. American Leak Detection does not guarantee any of the franchisee’s notes. Franchisees of American Leak Detection are eligible for expedited and streamlined Small Business Administration (SBA) loan processing through the SBA's Franchise Registry Program.

Training and Assistance: Attendance at initial training is mandatory for all new American Leak Detection franchisees. In addition, attendance at the annual convention is mandatory for 1 out of every 3 years of operation of the business. Additional attendance is optional. The initial training program includes home study, classroom and on-the-job training, and setup training, which are generally provided before or concurrent with the opening of the franchised business. The training fee ranges from $3,000 for four weeks for a transfer, $4,500 for six weeks for a new franchisee, and $6,000 for eight weeks for an international franchisee. No additional charge is made for initial training or the related training materials (included in initial fee), but franchisees are responsible for all travel, meals, lodging and living expenses associated with attending training. Franchisees must attend additional and/or refresher training programs conducted at location(s) specified by the franchisor as it, on a reasonable basis, designates.

Territory: Franchisees are granted a specific territory (Operating Territory) in which they are exclusively awarded the right to operate an American Leak Detection Franchise as specified in the Franchise Agreement. The franchisor will not operate or award a franchise for the operation of another American Leak Detection office in the franchisee’s Operating Territory. The Operating Territory is normally specified at the time the Franchise License Agreement is signed and will be based, in part, on a population of not less than 300,000, and will not overlap another Operating Territory. Franchisees are allowed to make marketing presentations to persons and companies headquartered anywhere but, to the extent permitted by law, they may only provide leak detection and/or repair services within the Operating Territory.

Term of Agreement and Renewal: The initial franchise term is for 5 years. Provided that the franchisees are not then in default and have substantially complied with the Franchise Agreement, they may renew for another 10-year term.

Obligations and Restrictions: The franchisor does not require personal “hands on” participation in the direct operation of the franchised business, although it does require the franchisee to use their best efforts to fully develop the Operating Territory. If the franchisee is not personally involved in the direct operation of the American Leak Detection business, it is required that the manager must have successfully completed the training provided to new franchisees. Franchisees cannot sell products or services not authorized by the franchisor and that franchisees must offer all of the products and services authorized by the franchisor, unless the franchisor allows differently due to special local circumstances or other reasons.

Estimated Number of Units: 395

Investment Tables:
Initial Investment
Name of Fee Low High
Initial Franchise Fee $29,500 $120,000
Training Package $3,000 $6,000
Equipment, Products and Training Package $25,500 $52,000
Business Licenses (depending on the area) $0 $250
Telephone Security Deposit $30 $250
Personal Working Hand Tools $200 $2,000
Work Vehicle $0 $35,000
Desk, Typewriter, Computer, Incidental Office Supplies (depending on nature of items) $100 $5,000
Shipping $100 $750
Insurance $750 $3,000
Sales Taxes, City, County, State $0 $2,500
Business Management Accounting Software - Resold or Transferred Franchises only $75 $300
Additional Funds to Commence Operations $17,500 $32,500
ESTIMATED TOTAL $76,755 $259,550
Other Fees
Type of Fee Amount
Royalty Fees The applicable percentage of Adjusted Gross Volume for each Reporting Month.
Fate Fees; Dishonored Checks $25 for late payments/reports and $5/day late penalty $25/check dishonored check fee.
Transfer of Business or Rights 1.5 % of total sale price, with a minimum of $2,500 and not to exceed $5,000 transfer fee; training of buyer at $150 per day for a minimum of four weeks at Company; or other reasonable fee determined.
Audit Expenses Costs of audit.
Training Fee for optional training and expenses incurred.
Indemnification Will vary under circumstances.
Business Management Accounting Software $75 - $300
Required Purchases Will vary under circumstances.

The above information has been taken from the FDD of American Leak Detection. Year of FDD: 2016

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