What are the options for providing Warranty Assurance to 360 Painting?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
| Type of Fee | Amount | Due Date | Remarks |
|---|---|---|---|
| Warranty Assurance | $10,000 | On termination or expiration | To ensure that any customer warranties you issued during the term are honored, you must post a bond in an amount equal to 0.5% of your Gross Sales for the 24 months before termination or expiration or (if the amount of the bond would be less than $10,000) pay us $10,000. |
Source: Item 6 — OTHER FEES (FDD pages 18–21)
What This Means (2025 FDD)
According to 360 Painting's 2025 Franchise Disclosure Document, franchisees have two options for providing warranty assurance to ensure customer warranties are honored upon termination or expiration of the franchise agreement. The first option is to post a bond equal to 0.5% of the franchisee's gross sales for the 24 months before termination or expiration. Gross sales include all monies and receipts derived in connection with the business, but exclude promotional allowances, sales taxes collected from customers, and the value of approved coupons, discounts, or customer refunds.
The second option is applicable if the bond amount calculated based on 0.5% of gross sales is less than $10,000. In this case, the franchisee must pay 360 Painting a fixed amount of $10,000. This ensures that regardless of the franchisee's recent sales volume, there is a minimum level of assurance available to cover potential warranty claims. This payment is due upon the termination or expiration of the franchise agreement.
This warranty assurance requirement is a mechanism for 360 Painting to protect its brand reputation and ensure that customers receive the warranty services they were promised, even after a franchisee leaves the system. It is important for prospective franchisees to understand these obligations and factor them into their financial planning, as the $10,000 payment or the cost of the bond can represent a significant expense at the end of the franchise term.