Wireless Zone Franchise Costs & Fees
Date of Incorporation: 1988
Franchising Since: 1989
Headquarters: Rocky Hill, Connecticut
Business Description: Automotive Technologies, Inc. is the franchisor. Franchisees sell wireless and wireline communication devices, services and accessories, including the sale and service of telephones, wireless data, satellite communications, wireless headsets, Internet based communication devices, and entertainment and security products and services.
Franchise Offer: The franchisor grants franchises for the operation of retail outlets operating under the mark Wireless Zone and any other trademarks, trade names, service marks and related logos it may develop and authorize for stores and certain systems relating to the establishment, development and operation of a store.
Financial Assistance: The franchisor is not obligated to offer directly or indirectly any arrangements for financing of franchisees’ initial investment, their equipment or the continued operation of their franchise. Franchisees must make their own financing arrangements. However, if franchisees meet the franchisor’s credit standards, it may offer to finance or arrange to finance certain items.
Training and Assistance: Before the Store opens, each person signing the Franchise Agreement as franchisee, or each individual who owns a 20% or greater interest in a business entity franchisee, must complete, to the franchisor’s satisfaction, its mandatory initial training program. The training program for a new franchisee consists of approximately 120 - 160 hours. Each day of training would be approximately 8 hours. The training consists of Store management, carrier relations, product training, sales and marketing strategies and sales floor training. In addition, the franchisor may conduct periodic training programs, including its conventions. Attendance at these meetings will be mandatory.
Territory: Franchisees will operate the Store at a specific location that the franchisor and its Provider in the market must first approve. The Store will be located in a trade area (Protected Territory), which will be the franchisee’s marketing territory defined in the Franchise Agreement by a county, city, town, shopping mall, Zip Codes, other current U.S. Census Department designations and/or specific streets. With the exception of enclosed shopping mall locations, for which the Protected Territory is the enclosed shopping mall itself, each Protected Territory will consist of between a 10,000 and 20,000 person population, subject to market factors that may result in a smaller or larger territory. A Protected Territory will specifically exclude exhibition, convention and/or conference halls and centers. If franchisees are not in default under the Franchise Agreement, and/or in default under the franchise agreements for any other Stores they operate in their Protected Territory, the franchisor will not operate Wireless Zone retail stores or grant Wireless Zone retail franchises or appoint sub-agents located within the Protected Territory, except as described below regarding alternative channels of distribution, including non-traditional locations, and except that the franchisor also reserves the right to retain any sub-agent we previously established in the Protected Territory.
Term of Agreement and Renewal: The length of the initial franchise term is 7 years. One additional term of 7 years is available, if requirements are met.
Obligations and Restrictions: The franchisor does not require that franchisees participate personally in the direct operation of the Store or attend the initial training program. Franchisees may operate their Store through 1 or more Owners or employees, who are acceptable to the franchisor, who they designate in writing in a form acceptable to the franchisor, to serve as their proxy to supervise the operation of the Store. Franchisees must designate a general manager to serve as their proxy if neither they nor a 5% Owner if they are a business entity franchisee, will devote a minimum of 40 hours per week to the operation of the Store. Franchisees or the designated general manager, if any, must meet the franchisor’s educational and experience standards and must attend and satisfactorily complete the initial training program and all future mandatory training programs. Any replacement general manager the franchisor approves must attend and satisfactorily complete the initial training class. Franchisees must offer and sell only that equipment and those products and services that the franchisor has approved. The offer and sale of counterfeit, unauthorized or illegal goods is strictly prohibited. Franchisees must offer, on an exclusive basis, all inventory and services that the franchisor designates as being required for all franchisees. Franchisees may only use the Provider(s) the franchisor designates.
Estimated Number of Units: 400
|Name of Fee||Low||High|
|Initial Franchise Fee||$1,000||$30,000|
|Travel and Living Expenses While Training (per person)||$1,500||$6,000|
|Real Estate/Rent||Not Included|
|Real Estate Improvements||$10,000||$30,000|
|Business Equipment and Supplies||$10,000||$16,000|
|Signs, Fixtures, Kiosks and Displays||$15,000||$95,000|
|Miscellaneous Opening Costs||$2,000||$2,500|
|Initial Product Inventory||$50,000||$100,000|
|Initial Marketing Program||$5,000||$5,000|
|Sales Tax, Use Tax, Other Similar Tax, Freight and Delivery Charges||$3,000||$38,000|
|Additional Funds - 3 months||$25,000||$50,000|
|ESTIMATED TOTAL (Excluding real estate costs)||$128,000||$393,500|
|Type of Fee||Amount|
|Royalties||Not more than 22% of the Gross Profit franchisees earn through sales at their Store.|
|New Program Fees||A royalty or other fee payment in an amount the franchisor determines.|
|Advertising/Marketing Contributions||Up to 5% of Gross Revenue.|
|Foundation Contribution||The amount the franchisor designates. The franchisor currently requires that franchisees contribute $0.25 for each account activation and upgrade transaction.|
|Lease Service Fee||10% of monthly rent.|
|Audits||Cost of audit, plus amount of underpayment with interest on underpayment.|
|Interest||1.5% per month.|
|Sales Tax, Use Tax, Gross Receipts Tax, Excise Tax||The amount imposed by the taxing authority.|
|Bank Charges, Administrative Costs; and Credit Card Fees||The then-current fees, equal to the amount of the bank or credit card company charge to the franchisor, plus an administrative fee, currently $35|
|Transfer Fee, Attorneys’ Fees and Sales Commission||Transfer fee in effect at the time of transfer for the Store (including any Satellite Locations in the Protected Territory) plus the franchisor’s attorneys’ fees. Currently the transfer fee is $7,500 plus $1,000 for each Satellite Location. The franchisor estimates its attorneys’ fees will be $0 - $1,200.
Sales commission is 10% of the sales price.
If franchisees are a business entity and they transfer the remaining term of the franchise agreement to a different business entity owned by the same persons in the same proportions, the transfer fee is currently $1,000 and the franchisor does not currently also charge attorneys’ fees or sales commissions.
|Renewal Fee||The renewal fee is $7,500, plus $1,000 (prorated) for any Satellite Location, but is $1,000 plus $1,000 (prorated) for any Satellite Location if the initial franchise fee was a reduced fee of $1,000 because the franchisee was an existing multi-unit franchisee of 10 or more Stores or a conversion franchisee that sold products and services of the Wireless Zone Provider.|
|Hold-over Fee||$200 per month.|
|Training "No-Show" Fee||The then-current fee; the current fee ranges from $200 - $1,000 per “no-show.” Fee range is dependent on type and duration of the training class, meeting or seminar and franchisees will be notified of “No-Show” fees in excess of $200 when registering for a training class, meeting or seminar.|
|Software License Fees and Additional Point of Sale License/td>||Vendor’s then-current ongoing fee per Store location. The current ongoing fee is $100 per month which will include up to 3 point of sale licenses per Store. If franchisees request additional point of sale licenses, the Store will be charged $15 per month for each additional point of sale license. In addition, the Store will be charged the current ongoing fees of $10 per month for a credit card integration module and $10 per month for a business intelligence module.|
|Additional E-Mail Account Fee||The then-current fee. The current fee for each additional e-mail account and wireless product connection is $7.50 per account, per month and billed annually.|
|Digital Video and Radio Services||Vendor’s then current ongoing fee; the current fee ranges from $20 to $40 per month per Store. Fee range is dependent on type of services provided.|
|Gift Card Program||Vendor’s then current ongoing fee; current ongoing fee is $10 per month per Store.|
|Rewards Program||Then-current ongoing fee; current fee is $5 per month per Store.|
|Chatterspot||Vendor’s then current ongoing fee. Current fee ranges from $34 to $41 per month per Store, depending on the type of services provided.|
|Traxsales||Vendor’s then current monthly fee; currently $20 per month.|
|Initial Training Fee||The then-current fee for additional attendees, plus franchisees must also pay the costs of travel, lodging, meals and additional expenses for themselves (or a proxy) and their employees; the current fee is $625 per additional attendee.|
|Additional Training||The then-current fee for individualized training, plus travel, lodging, meals and additional expenses of the franchisor’s representatives, if applicable. The current fee for individualized training is $500 per day for training at the Store or another location. The franchisor may also provide additional training via Intranet or other form of electronic communication. The fee for delivering training via Intranet or other electronic form will not exceed the fee for on-site training.|
|Convention Fee||The then-current fee for attendance at convention. The current fee depends on the number of Stores franchisees own and operate as follows:
Stores 1-2: $500 per Store;
Stores 3-5: $400 per Store;
Stores 6-10: $300 per Store;
Stores 11 and higher: $200 per Store.
|Ongoing Product Inventory Purchases –Optional||Amount will vary depending upon the sales level franchisees achieve and their delivery schedule.|
|Insurance Procurement Fee||The cost for the franchisor’s coverage plus its expenses if it obtains insurance for the franchisee.|
|Cleaning Costs||Cost of cleaning services.|
|Customer Service Charges||Will vary with the circumstances.|
|Step-in Rights Exercise||The costs, including attorneys’ fees; franchisees will also pay the franchisor reasonable compensation which it estimates will not exceed 10% of Gross Revenue; franchisees will also indemnify the franchisor.|
|Reserve for Charge-Backs||An amount based on historical data to fund charge-backs against commissions expected to occur 6 months following termination or expiration of the Franchise Agreement.|
|Provider Allowances||The amount of Provider charge-backs for signs and Store build out allowance.|
|Infringement Liquidated Damages||$10,000 per day.|
|Signs, Kiosks, Displays, Inventory and Other ATI Property Removal Costs||Our costs.|
|Marketing Development Funds Termination Fees||Franchisees will repay any marketing development funds they received if they (or their transferee) close their Store or otherwise terminate the Franchise Agreement after beginning operations within a time period specified by a Provider. Also, franchisees will repay a pro rata portion of any marketing development funds they received, based on their shortfall, if they fail to achieve the minimum number of net activations of postpay service that a Provider requires that franchisees achieve during their initial period of operation.|
|Non-Competition and Non-Disclosure Damages and Costs||$100,000 for each violation plus the franchisor’s attorneys’ fees and costs for enforcement.|
|Indemnification||Amount of loss or damages plus costs.|
|Cure of Lease Defaults and Reletting Expenses||Amount the franchisor must pay to cure the franchisee’s defaults, plus its costs to acquire possession of the Store premises and relet them to another franchisee.|
The above information has been taken from the FDD of Wireless Zone. Year of FDD: 2016
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