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HomeVestors of America Franchise Costs & Fees

Date of Incorporation: 1996
Franchising Since: 1996
Headquarters: Dallas, Texas

Business Description: HomeVestors of America, Inc. is the franchisor. The primary activity of a HomeVestors Business is to buy and sell and rehabilitate residential and commercial properties and furnish certain services to residential and commercial property buyers. Rehabilitation includes all remodeling and repairs necessary to make the property marketable.

Franchise Offer: The franchises offered are for the right to operate a business to buy, sell and rehabilitate residential and commercial properties and provide certain services to buyers and sellers. The franchisor offers both a full franchise and an associate franchise. The full franchise has a higher initial franchise fee but generally lower ongoing fees than an associate franchise, each of which may be operated on a full-time or part-time basis.

Financial Assistance: The franchisor does not currently offer, directly or indirectly, any financing arrangements to franchisees regarding the initial franchise fee. The franchisor’s affiliate, HVII, is currently offering financing for real property acquisitions and repairs that meet its interim lending financing criteria. The franchisor may arrange financing for franchisees for the purchase and/or repair of real properties, but it is not under any obligation to do so. All financing is subject to market conditions.

Training and Assistance: Franchisees, each of their owners who will be involved in the operation of the HomeVestors Business (including their designated managing owner), and each of their employees and independent contractors the franchisor designates, must participate in an initial training program on the operation of a HomeVestors Business. The initial training program is 5 days. In the future, the franchisor may require franchisees or their employees to attend advanced, refresher and other additional training programs that will be approximately 2 to 4 days in duration.

Territory: Franchisees will receive a Territory, but it is not exclusive to them. The franchisor may establish other franchised or company-owned businesses that may compete in the Territory. Franchisees may face competition from other franchisees, from outlets that the franchisor owns, or from other channels of distribution or competitive brands that the franchisor controls. The Territory in which franchisees may conduct their HomeVestors Business is identified in the Franchise Agreement and is typically all or a portion of a designated market area, metropolitan statistical area, or group of contiguous counties.

Term of Agreement and Renewal: The length of the initial franchise term is 5 years. Franchisees may renew their Franchise Agreement if the franchisor continues to maintain a franchise program and if they meet certain requirements and conditions of their Franchise Agreement.

Obligations and Restrictions: The managing owner must personally participate, full or part time, in the direct operation of the HomeVestors Business, hold an equity interest in the franchise, use his or her best efforts to promote and enhance the sale of the Products and Services in the entire Territory and faithfully, honestly and diligently perform the obligations under the Franchise Agreement. Franchisees must offer and sell all the Products and Services that the franchisor designates for a HomeVestors Business.

Estimated Number of Units: 605

Investment Tables:
Initial Investment for a Full Franchise
Name of Fee Low High
Initial Franchise Fee $55,000 $55,000
Leasehold Improvements $0 $5,000
Furniture, Fixtures and Equipment $0 $10,200
Signage $0 $4,200
First Month’s Rent $0 $2,000
Security Deposit $0 $2,000
Opening Supplies $200 $1,950
Advertising $6,000 $60,000
Training Expense $1,800 $6,000
iPad and Computer Equipment $2,000 $6,000
Insurance $2,000 $8,000
Miscellaneous Opening Costs $1,000 $7,900
Purchase and Repair of Properties $13,000 $129,000
Additional Funds for 6 months $0 $50,000
ESTIMATED TOTAL $81,000 $347,250
Initial Investment for an Associate Franchise
Name of Fee Low High
Initial Franchise Fee $18,000 $18,000
Leasehold Improvements $0 $5,000
Furniture, Fixtures and Equipment $0 $10,200
Signage $0 $4,200
First Month’s Rent $0 $2,000
Security Deposit $0 $2,000
Opening Supplies $200 $1,950
Advertising $6,000 $60,000
Training Expense $1,800 $6,000
iPad and Computer Equipment $2,000 $6,000
Insurance $2,000 $8,000
Miscellaneous Opening Costs $1,000 $7,900
Purchase and Repair of Properties $13,000 $129,000
Additional Funds for 6 months $0 $25,000
ESTIMATED TOTAL $44,000 $285,250
Other Fees
Type of Fee Amount
Transaction Fees Franchisees must pay a transaction fee for five different types of transactions as specified in the FDD in the amount specified based on their current level.

Transaction Fee Schedule:
(Level – % of Sales Price)
1 – 3.0%
2 – 2.0%
3 – 1.5%
4 – 1.25%
5 – 1.0%
6 – 0.80%
Transaction Fee – Purchase Transaction $500 for each purchase transaction.
Transaction Fee – Assignment Transaction Greater of (a) $500 or (b) the lesser of (i) the amount determined in accordance with the Transaction Fee Schedule or (ii) 10% of the assignment fee franchisees receive for assigning the contract rights to purchase the applicable property.
Transaction Fee – Sale Transactions The amount determined in accordance with the Transaction Fee Schedule, less the amount of the Transaction Fee paid on the Purchase Transaction for the applicable property.
Transaction Fee – Hold Transactions The amount determined in accordance with the Transaction Fee Schedule, less the amount of the Transaction Fee paid on the Purchase Transaction for the applicable property.
Transaction Fee – Delayed Sale Transactions The amount determined in accordance with the Transaction Fee Schedule, less the sum of (a) the amount of the Transaction Fee paid on the Purchase Transaction for the applicable property and (b) the amount of the Transaction Fee paid on the Hold Transaction for the applicable property.
Associate Royalty Fee Greater of (i) two percent (2%) of the Sales Price for each Sale Transaction, Hold Transaction, Assignment Transaction and Delayed Sale Transaction, but not to exceed 10% of the assignment fee you receive with respect to an Assignment Transaction, or (ii) Five Hundred Dollars ($500), but less, with respect to any Delayed Sales Transaction, the Associate Royalty Fee paid on the Hold Transaction for the same property. In addition, one percent (1%) of the after repaired value of each property in the franchisee’s inventory on the date of upgrade to a Full Franchise.
Monthly Fee $350 per month (Note: This is waived in the month franchisees report a Purchase Transaction or Assignment Transaction and pay the applicable Transaction Fee).
Local or Regional Marketing/Advertising Council Level 1 franchisees are not required to advertise, unless their Advertising Council documents or the NAF require them to contribute to the Advertising Council or NAF, limited to a maximum contribution requirement of $1,000 per month.

Level 2 franchisees must spend at least $1,000 per month for local advertising. A Level 2 franchisee may elect to contribute $200 to the Marketing Fund or the NAF, as the franchisor directs, that month in lieu of spending $1,000 for local advertising unless their Advertising Council documents or the NAF require them to contribute to the Advertising Council or NAF, limited to a maximum contribution requirement of $1,000 per month.

Level 3 franchisees must spend at least $1,000 per month for local advertising.

Level 4, 5 and 6 franchisees must spend at least $3,000 per month for local advertising.
Marketing Fund Contributions Currently $250 for each Sale Transaction, Assignment Transaction and Hold Transaction, maximum of $500 for each Sale Transaction, Assignment Transaction and Hold Transaction.

In addition, a Level 2 franchise must contribute $200 to the Marketing Fund or NAF, as the franchisor directs, for each month that it did not spend at least $1,000 for local advertising.
Marketing Fund Materials The Marketing Fund’s direct cost plus any related shipping, handling and storage charges.
Review of Advertising and Marketing Materials Not to exceed $500 per review. Currently, there is no fee for this review.
National Advertising Fund Contribution Not to exceed the minimum monthly local advertising requirement specified for the franchisee’s Level. The current rate is (i) $88 per lead or (ii) a percentage of the NAF expenditures based on the population of the Territory as compared to the population of all other franchised territories, as selected by franchisees or their Advertising Council. If franchisees are part of an Advertising Council, the population-based contribution will be divided among the franchisees in the Advertising Council.
Franchise Upgrade Fee The then-current initial franchise fee for a Full Franchise, less (a) the initial franchise fee paid for the Associate Franchise, and (b) all the accrued credits from the payment of the Associate Royalty Fee, but not less than $0.00
Office Visits Not to exceed $1,000 per visit.
Interim Loan Placement Fee Currently $300 ($100 if submitted using ValueChek on an iPad) for loan placement made by the franchisor.
Credit Report Cost of credit report.
Software Updates Not more than $500 per year.
HVA MAPS 2.0 Proprietary Software Program Currently, there is no cost for the basic version of the software. Franchisees may upgrade to the pro version for $59 per month. The franchisor or the approved supplier may increase the monthly fee (up to $1,000 per year) upon 30 days written notice to franchisees. The franchisor may charge for upgrades or maintenance. Franchisees may choose to upgrade the HVA MAPS software to incorporate additional features.
ValueChek Proprietary iPad Application Currently, there is no cost for the mobile application. The franchisor or the approved supplier may begin collecting a monthly fee upon 30 days written notice to franchisees or may charge for upgrades or maintenance.
Transfer Fee $5,000 for an Associate Franchise, $15,000 for a Full Franchise.
Referral Fee $5,000
Late Fee $100 per late fee, report or statement.
Insurance Fee A reasonable amount based upon the franchisor’s expenses.
Indemnification Will vary under circumstances.
Interest on Late Payments Highest contract rate permitted by law or 1.5% per month, whichever is less.
Inspections and Audits Cost of an audit (plus $1,000 penalty for each Transaction Fee not paid within 30 days of closing).
Training Charges and Late Registration Fees $200 per person.
Advanced and Other Training Currently $200 per person.
Email Addresses Currently $5 per month for each homevestors.com email address in excess of two.
Loan Arrangement Fee Currently up to 3% of loan amount as follows:

1% if loan is paid within 30 days of loan closing.
2% if loan is paid between 31 and 120 days of loan closing.
3% if loan is paid after 120 days of loan closing.
Loan Extension Fee Currently 3% of loan amount, with possible credit to Loan Arrangement Fee as follows:

2% credit to Loan Arrangement Fee if loan is paid within 30 days of loan extension.
1% credit to Loan Arrangement Fee if loan is paid between 31 and 120 days of loan extension.
Repair Draw Fee $100 per repair draw.
Second Eyes Analysis Fee $499 for initial analysis of each property and $90 for each follow up analysis. An additional $100 trip charge will be added to the Second Eyes analysis fee if the subject property is located more than 50 miles from a major market area.
Annual Convention Fee Currently $599 per person. A minimum of one fee must be paid.
Renewal Fee $2,000, unless you are at or above Level 3, in which case we will waive the renewal fee.
Default Fine Varies depending on circumstances.
Administrative Territory Change Fee $750
Liquidated Damages $4,000 (representing the Transaction Fees on 8 Purchase Transactions) as liquidated damages.
Call Distribution System Fee Currently $0.29 per minute for calls.

The above information has been taken from the FDD of HomeVestors of America. Year of FDD: 2016

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