What are the implications of Item 10 (no financing offered) for a prospective 360 Painting franchisee considering the initial investment costs outlined in Item 7?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
EM 5: INITIAL FEES**
Franchise Fee
The initial franchise fee ("Franchise Fee") for a 360 Painting Business is $65,000. The Franchise Fee is payable by wire transfer and generally must be paid in one lump-sum upon execution of the Franchise Agreement. If you obtain third-party SBA financing, the terms of that financing may require that you pay a portion of the Franchise Fee (typically $15,000) upon execution of the Franchise Agreement and the remainder (typically $50,000) be paid after receiving funding. The Franchise Fee is fully earned when paid and is not refundable.
Discount Offered
We offer two different discount options on the Franchise Fee. The discounts may not be combined.
First, we offer a 10% discount on the Franchise Fee for honorably discharged U.S. military veterans and individuals working in rescue, emergency services and policing who purchase a new Franchised Business.
Second, we offer a 10% discount on the Franchise Fee if you already own and operate an existing franchise in a franchise system owned by us or one of our affiliates and you are in compliance with the terms of your franchise agreement.
During our last fiscal year, we sold franchises for a Franchise Fee that ranged from $0 to $65,000.
What This Means (2025 FDD)
Based on the 2025 FDD, 360 Painting does not offer direct financing to franchisees. This means that prospective franchisees must secure funding for the initial franchise fee and other startup costs through their own means, such as personal savings, loans from banks or credit unions, or other external financing options. The initial franchise fee for a 360 Painting business is $65,000, which is payable by wire transfer and generally must be paid in one lump-sum upon execution of the Franchise Agreement. However, if a franchisee obtains third-party SBA financing, the terms may require a portion of the Franchise Fee (typically $15,000) upon execution of the Franchise Agreement and the remainder (typically $50,000) after receiving funding. Additionally, there is an initial technology fee of $5,000 due upon signing the Franchise Agreement.
Given that 360 Painting does not provide financing, franchisees need to be prepared to cover the full initial investment, which includes not only the franchise fee and technology fee, but also other expenses detailed in Item 7 such as real estate, training expenses, and initial marketing costs. This lack of direct financing can be a barrier to entry for some potential franchisees who may not have sufficient capital or access to credit. It also means that franchisees must carefully evaluate their financial situation and develop a comprehensive business plan to demonstrate their ability to repay any loans they secure.
While the FDD mentions discounts on the Franchise Fee for honorably discharged U.S. military veterans and individuals working in rescue, emergency services, and policing (10% discount), and for those who already own and operate an existing franchise in a franchise system owned by 360 Painting or one of its affiliates (10% discount), these discounts do not negate the need for substantial upfront capital. The franchisee should ask 360 Painting for a detailed breakdown of all anticipated initial investment costs and recommendations for third-party financing options to help navigate this aspect of starting their franchise.