Franchising Since: 2007
Headquarters: Cleveland, Ohio
Estimated Number of Units: 125
Franchise Description: USA Insulation Franchise, LLC is the franchisor. Franchisees operate a business that (i) offers and sells an array of insulation products, including proprietary injection foam, polyurethane spray foam insulation, blown fiberglass insulation, rolled/batten fiberglass insulation and other products and services that the franchisor authorizes, and (ii) evaluates a customer’s insulation needs and subsequently installs one or more of the foregoing approved products at that customer’s property, utilizing the franchisor’s marks and proprietary operating system.
Training Overview: Before franchisees may open their franchised business, they must complete, to the franchisor’s satisfaction, the initial training program including all phases of new office launch checklist. This training is offered at the franchisor’s headquarters or another location it designates unless the franchisor, in its sole discretion, determines to conduct training by virtual/remote means. Those individuals that will be installing the proprietary foam insulation products must attend and complete the relevant components of the initial training program that the franchisor designates as necessary to provide those services. Once franchisees and their required trainees have completed the components of the initial training program the franchisor requires, it may provide franchisees with on-site assistance at their franchised business that is designed to provide additional on-the-job instruction. The franchisor, at its option, will conduct conferences or additional training sessions.
Territory Granted: Franchisees will operate from one location located in their designated territory and may not relocate the franchised business without the franchisor’s prior written consent. If franchisees purchase a large market territory, they will typically receive a territory consisting of up to 150,000 homes built before 1990 (“older homes”). If franchisees purchase a small market territory, they will typically receive a territory consisting of up to 100,000 older homes. The number of older homes will be determined based upon figures available from the United States Census Bureau. Under certain circumstances, franchisees may accept customers from outside the designated territory as long as these customers do not reside in the designated territory of another franchisee (unless that other franchisee consents). Once the franchised business has been open and operating for a period of six months, the franchised business must generate certain minimum productivity levels. The continuation of territorial rights is contingent upon achieving and maintaining these minimum productivity levels. For so long as franchisees are in compliance with the terms of their Franchise Agreement, the franchisor will not establish any other USA Insulation businesses in their designated territory.
Obligations and Restrictions: The franchisor requires franchisees personally participate in the actual operation of their franchised business. Under certain conditions and with its prior approval, the franchisor may permit franchisees to appoint a dedicated manager to handle day-to-day management of the franchised business on-site at the approved location but only after the franchised business has been in operation for at least 18 months. Franchisees must conduct their business in accordance with the USA Insulation operations manual and policies. Franchisees must use the approved location solely for the operation of the franchised business; and must keep the approved location open and in normal operation for the hours and days as the franchisor may specify in the manual or as it may otherwise approve in writing. Franchisees are prohibited from offering or selling any products or services not authorized in writing by the franchisor.
Term of Agreement and Renewal: The length of the initial franchise term is 10 years commencing on the date the franchisor signs the Franchise Agreement. If franchisees are in good standing and they meet the specified conditions, including signing the then-current Franchise Agreement, they may renew for one additional term equal to the then-current term the franchisor is granting to new franchisees generally.
Financial Assistance: The franchisor may offer financing of up to the full amount of the initial franchise fee to prospects who meet the franchisor’s qualifications, including creditworthiness. Except as described, the franchisor offers no financing arrangements to its franchisees. The franchisor does not receive payment or other consideration for the placing of financing. The franchisor does not guaranty any note, lease or obligation franchisees enter into for their franchised business.
Estimated Initial investment
| Name of Fee | Low | High |
| Initial Franchise Fee | $45,000 | $55,000 |
| Real Property | $12,000 | $24,000 |
| Leasehold Improvements | $12,000 | $15,000 |
| Insulation Truck and Upfit | $120,000 | $150,000 |
| Equipment | $5,000 | $15,000 |
| Office Supplies, Fixtures & Signs | $8,000 | $15,000 |
| Professional Fees | $500 | $5,000 |
| Deposits | $2,000 | $10,000 |
| Opening Inventory | $14,000 | $30,000 |
| Initial Marketing Spend | $29,000 | $67,000 |
| Initial Training Expenses | $8,000 | $18,000 |
| Insurance | $4,000 | $6,000 |
| Additional Funds | $40,000 | $60,000 |
| ESTIMATED TOTAL | $299,500 | $470,000 |
Other Fees
| Type of Fee | Amount |
| Royalty | The greater of: (a) 5% of gross sales of your franchised business from the preceding reporting period; or (b) $1,000 per month. |
| Renewal Fee | 20% of the then-current initial franchise fee. |
| Transfer Fee | 25% of the then-current initial franchise fee, for each transfer. |
| Brand Fund Fee | The greater of: (a) 2% of the gross sales of the franchised business from the preceding reporting period; or (b) $500 per month. |
| Technology Fee | $300 - $500 per month. |
| Ongoing Product Purchases | Varies based on sales within the designated territory. |
| Relocation Fee | Actual cost incurred by the franchisor. |
| Training Fee | $500 per day per trainer. |
| Ongoing Training | Up to $2,000 per attendee. |
| Convention Fee | Up to $1,500 per attendee. |
| Product/Supplier Approval Costs | Reasonable cost of inspection or testing, plus actual cost of laboratory fees, professional fees and travel and living expenses of the franchisor’s personnel. |
| Management Fee | The franchisor’s costs to operate the franchisee’s business. |
| Audit Costs | Actual costs incurred by the franchisor plus underpayment amount and lesser of 12% interest or maximum allowed by applicable state law. |
| Late Submission Fee and Interest/ Payment Failure | $100 per violation and 12% interest per year, or maximum rate as permitted by applicable state law if lower. $50 per check or electronic transfer that is dishonored, fails to process, or is returned. |
| Indemnification; Attorneys’ Fee; Costs and Expenses of Enforcement | Will vary according to circumstance. |
| Online Listing Failure | Cost of listing or advertisement. |
| Insurance Fee | Cost to obtain and maintain insurance plus the franchisor’s administrative fee. |
| Non-Compete Failure | Amount equal to the then-current initial franchise fee for each competing business the franchisor identifies plus 7% of each competing business’ gross sales until expiration of the non-competition period in the Franchise Agreement. |
| Step-In Fee | A fee equal to 8% of the gross sales of the franchised business during the time period that the franchisor is operating the franchised business, plus reimbursement of all its costs to operate the business. |
| Liquidated Damages | Amount equal to net present value of lost future continuing royalties and Brand Fund Fees for one year following the termination of Franchise Agreement. |
| Client Complaints | All amounts the franchisor incurs to satisfy a complaint of a franchisee’s client. |
| Marketing Services | $65 per month, per territory. |
| Phone and Messaging Services | $34.99 per month per user, plus $0.012 cents per text message. |
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