What financial obligation do I have to 360 Painting after termination or non-renewal of the franchise agreement?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Franchise Agreement | Summary you agree to mediate any dispute, controversy or claim before | |
|---|---|---|---|
| bringing suit. | |||
| v. | Choi ce of forum | Section 27.2 | Subject to applicable state law, any mediation or litigation must be pursued in courts located in the county and state in which we maintain our principal place of business (currently the City of Charlottesville, VA). |
| w. | Choi ce of law | Section 27.1 | Subject to applicable state law, Virginia law applies, except disputes over the Marks will be governed by the United States Trademark Act of 1946 (Lanham Act, 15 U.S.C. Sec. 1051 et seq.). |
| Provision | Section in Franchise Agreement | Summary financial report or other data that underestimates fees; multiple defaults within a twelve month period; material default under any other agreement you have with us; or 3 or more failed payments within any 12 month period. | |
| i. | Franchisee's obligations on termination or non renewal | Section 20; Internet Web Sites and Listings Agreement; Telephone Listing Agreement | You must: return all Confidential Information; stop using the System and the Marks and refrain from doing business under a confusing name or manner; pay all sums owed to us; de identify the Vehicles and the Business; cancel or assign to us any assumed names; assign your telephone and facsimile numbers to us; fulfill warranties obligations and either (i) post a bond equal to 0.5% of your gross sales for the last 24 months, or (ii) pay us a fee; comply with the covenants not to compete and any other surviving provisions of the Franchise Agreement. |
| j. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, upon termination or non-renewal of the franchise agreement, you are obligated to pay all sums owed to 360 Painting. Additionally, you must fulfill all warranty obligations. To ensure fulfillment of these obligations, you must either post a bond equal to 0.5% of your gross sales for the last 24 months or pay 360 Painting a fee.
Beyond the direct monetary obligations, several other requirements could indirectly impact your finances. You must return all Confidential Information, cease using the 360 Painting System and Marks, and refrain from operating under a confusingly similar name or manner. You are also required to de-identify your vehicles and business, cancel or assign any assumed names to 360 Painting, and assign your telephone and facsimile numbers to them.
These obligations are fairly standard in franchising. The requirement to pay all sums owed is a universal condition, as is the cessation of using the franchisor's trademarks and confidential information. The bond or fee related to warranty obligations is less common but serves to protect customers after the franchise ceases operation. Prospective franchisees should carefully consider these post-termination obligations and factor them into their financial planning.